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    51 views47 pages

    International Trade Logistics

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    Sasmit Patil

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    © All Rights Reserved
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    MARKETING LOGISTICS : CONCEPT, OBJECTIVES AND SYSTEM ELEMENTS MARKETING AND ECONOMIC ACTIVITY Marketing is one of the important segments of the economy of a country and through this area of economic activity, goods and services flow from producers or suppliers to consumers with a view to satisfying the needs and wants of latter. Its importance in the field of business has substantially gone up due to the shift in the emphasis from Production to Distribution that has taken place in the last two to three decades. Marketing essentially comprises two important tasks : (1) Identifying what goods and services Consumers require, and (2) Providing the same to them in the places where they are needed and at prices that the consumers are willing to pay. The above is primarily due to the obvious fact that “Goods and Services in International Trade are not traded on as is where is basis but the same have to be made available at those places or points where there exists a demand and at times when the same are needed and at prices the consumers are willing to pay. This mission must be accomplished at a profit to the Entrepreneurs who are engaged in it” The management of flow of goods and services from suppliers to buyer thus assumes an important place in marketing function. This is more so due to the prevailing fierce competitive International Trading environment in which the supplier has to operate. Understanding fully the intricacies involved in international trade and having made commitments by accepting the order from the buyer, the supplier must ensure that the venture not only turns out profitable to him, but also establishes his credibility with the buyer with a view to furthering his business interests by way of not only getting repeat orders from a regular buyer but the possibility may Not be ruled out that such satisfied buyer helps him in getting orders from other potential buyers. Export Marketing has thus to be viewed as a specialised activity due to the complexities involved in it. Having secured an export order after a great deal of efforts and cost, the achievement of supplier depends largely on the successful execution of the same in terms of timely delivery. SIGNIFICANCE OF DISTRIBUTION IN MARKETING STRATEGY aracterised by abundance of consumer producy s In today’s business environment which is ¢ of all sizes and interests compete vigorous) and services and where business enterpris within a complex marketing system, the st p how the activities of marketing are catried out in the most effective manner possible. This owing to the fact that successful businesses of today, are market-oriented and depend Upon the ettectiveness of their marketing programme by how well they meet the needs of the, markets. s8 of selling depends, to a great extent, of An overall Marketing Strategy involves developing a combination of inputs that will help in the achievement of desired output. It is against this background that the various inputs of Strategy formulation are related to various elements of the Marketing Mix, consisting of two main types, namely, Production Element and Distribution Element. While the production element comprising 4 Ps (Product, Price, Place and Promotion) aims at creating ‘Form Utilty’ by taking such marketing decisions as Product Line Variety, Design, Style, Colour, Brand, after Sales Service etc., the Distribution Element, which is one key area of the Marketing Mix, is concerned with distribution channel fixation and making arrangements for physical movement of the goods and services to create ‘Time and Place Utility’. A channel of distribution is nothing but a selected set of intermediaries engaged in effective movement of finished products from the source of origin to the ultimate destination or to the consumers. The other issue in distribution is concerned with Physical Distribution involving a number of activities, such as, Freight, Transportation, Warehousing, Material Handling, Packaging and Packing, Market Forecasting and Customer Service. Physical Distribution or Logistics Management encompasses the tasks involved in planning implementing and controlling the physical flows of materials and finished goods from points of origin to points of use to meet the needs of consumers at a profit. Thus such activities are concerned with the creation of time and place utility and thereby adding to the intrinsic value of the product. The utility of a product does not merely depend upon its form but also on its Placement at the point of need at the right time. A Marketing Process is said to be complete as soon as (i) The goods have been produced and priced to satisfy the identified needs of a segment of buyers, (ii) Channels of Distribution have been fixed for their supplies to consumers, (tii) An awareness has been created among the buyers about the availability of goods through information facilitation and (iv) Arrangements are made for physical movement of the goods at the place and time indicated by the buyer. From the above, itis clear while customer satisfaction is of paramount importance, but al the same time it has also to be ensured that the Marketing Process should be profitable to the seller. Thus with a view to fully implementing the marketing Concept, it becomes incumbent to produce a product that meets customer needs and make arrangements for Physical movement of the product in a convenient and effective manner, There are misconceptions that only the production process is concerned with creation of value and the distribution process is considered to add costs rather than value. However, experience shows that utilities of four types. namely. (i) Form Utility, (ii) Place Utility, (iii) Time Utility, and (iv) Possession Utility add value to a product. Form Utility is transformation of raw material for production of a product that meets customer needs AIM OF LOGISTICS Logistics or Physical Distribution refers to the art of managing the flow of products or materials from producer or supplier to the customer or user and is thus concerned with creation of time and place utility “LOGISTICS” ORIGIN OF THE TERM AND ITS RELEVANCE TO INTERNATIONAL TRADE The word “Logistics” has been drawn from the verb ‘Loger’ and is French in ongin t's a military term meaning the Art of Transport, Supply and Quartering of Troops. Essentially a military concept, which refers to the arrangements to be made for achieving a given objective: e.g. for fighting a war, a meticulous planning is needed so that the troops are properly deoloyed and the supply line consisting of, inter-alia, Weaponary, Food, Medical Assistance etc s maintained. Likewise, the plan should be such that there is a minimum loss of men anc materials and while at the same time capable of being altered if the need arises The association of this term with trade in general, and International Trade in partcular, pnpowm's to the need of working out a strategy for managing the flow of materials and products from the source of origin to ultimate user with time and cost efficiency. It is some time now since Peter Drucker described physical distribution management as the last great frontier for co reduction. COMMONALITY OF TERMS Marketing Logistics, Physical Distribution and Materials Management are the terms used interchangeably in a business world and are usually taken as one and the same. However, there exists marked distinction in the scope of activities covered by these terms Physical Distribution or Marketing Logistics involves Planning, Implementing and Controlling the Physical Flow of material, final goods and related information from point of origin to point of consumption to meet customer requirements at a profit. Whereas: distribution is the addition of time, place: and ownership utilities to goods. It also includes transportation of goods from the point of original or intermediate production to the place of sale or further fabrication and their actual sale or transfer into the possession ol the ultimate buyer in this sense, distribution includes a number of fields of specialized management such as Sales, Advertising, Financing, Traffic Management and Warehousing, So far as materials management is concerned, it refers to the flow of materials from raw material receipt through manufacturing and processing stages to supply of finished goods. F LOGISTICS sumer together with logistics is to bring OBJECTIVES O! product and co he main objectives of the 3 Rs, namely © Right quantity of goods at the Bight place’point at the Right time for the least cost These 3 Rs have avery close linkage with the commercial framework of International Trade, which consists of following five elements, ViZ., ena seller and a buyer tract of sale/purchase betwet istitute the cargo: (i) Aconl (ii) A product table packaging will con: or commodity which after sul 1 terms of delivery; ntract which depends upon th (ii) A transport co cargo ownership or document (wv) Documentation of of title; and (Payment of purchase and freight. e fact that it leads to ultimate consummation of ler’s side with regard to supply of fy the buyer because the latter is Hence from the supplier's side, delivery of goods has to be the terms of contract, since the same is essential with | requirements. In the event of failure to comply with t only lose his sales proceeds, but may also be t so specifies. Needless to say that better ment of title is a good promotional ibility but also for ensuring flow of System lies in th Mere promises from the sell jive prices may not satis! The importance of a Logistic the sale/purchase contract. contracted products, at competiti interested in actual performance. undertaken at the place or point as per view to fulfilling the commercial and legal the stipulated supply period, the seller may no! liable for legal punishment if the sales contract delivery schedule followed by timely despatch of docu strategy not only from the point of view of creating credil repeat orders from the buyers. IMPLICATIONS OF 3 Rs INEXPORT MARKETING Havi = i ae into asales contract with the buyer abroad, the seller or exporter is required to — ve er " . eee so as to achieve the objectives of logistics. In the event ofnon- , ikely to be some impli ibed i ee implications, as have been described in the following Right Quantity : Right quanti y points out the need to adhet goods in correct quantity. The exporter (suy ed ar contac . ipplier of products) is i ean ra required to m per the contract — nothing more, nothing less. This element has two nee nae i s in the conte: of export marketing. Firstly, quantity less than the contracted one is not acceptable to the buyer or importer and also to the banker through whom payment from the buyer is channelised to the exporter supplier. This is more necessary in case of contracts where part shipment or shipment of goods in parts is not permitted as per the term's agreed. However, in the contract where shipment of goods in parts is permitted, all parts taken together should not fall short of the total quantity agreed as per contract. In export marketing, part-shipment is presumed unless specifically prohibited when the export order is backed by a Letter of Credit — an agreement whereby a bank makes payment to the exporter without recourse to the importer. Such flexibility under a Letter of Credit exists because of an international convention, referred to.as Uniform Customs and Practice for Documentary Credits (UCPDC), governing the guidelines for negotiation of shipping documents by banks all over the world Secondly, the correct quantity of contracted goods may be in terms of number of packages. bundles, bales or any such units to be consigned. The supplier or exporter is legally duty bound to consign goods in the contracted numbers. Any violation of the same may result in non-payment by the buyer (importer). The reason for strict compliance with this clause is also due to the fact that in many cases the buyer or the importer is not the actual user of the goods and he might have resold them much before the actual physical receipt. And in case the consignment in question has been resold to two or more buyers in specific numbers or units. it will not be possible for the importer to distribute the consignment to such buyers without incurring extra cost. Right Place/Point : It indicates the requirement of delivery of the contracted goods at the place or point desired by the buyer. In other words, creating place utility for the product is another essential requirement. Since in export marketing, “Desired Location” has a special connotation, the duty of exporter in effecting delivery is reflected in the terms of shipment agreed or as per the transport contract between exporter and importer. Besides, the point of delivery has a direct relationship with the terms used for price quotation agreed by the exporter and importer in the sales contract. For example, under an FOB (Free on Board) contract, the seller is required to place the goods on board the carrier nominated by the buyer at a named port of loading. Costs and risks prior to this stage are on account of the exporter. Although under such a contract, the seller may arrange for sea transportation on behalf of the buyer, the latter is responsible to bear all costs and risks of loss of or damage to the goods from that point. In such a contract, the exporter Procures the transport document (Bill of Lading or Airway Bill) showing shipment of goods and sends the same to the importer, mostly through bank to secure payment. Likewise when the goods are sold on CIF (Cost, Insurance and Freight) basis, the exporter has to consign the goods to the agreed destination and has to procure marine insurance against the buyer's risk of loss of or damage to the goods during the carriage. In both these cases, physical delivery to the buyer is not the requirement but shipping of consignment is necessary. The sales contract stipulates the time or date for delivery thereof leads to creation of time utility. For a successful nee Marketing, it eee hat the delivery of goods is made by the seller within the stipulateg i essattl n pt of delivery on time, the buyer may not pay for the n-recei : time. Otherwise, in the event of not fo fulfiling his commitment, is required to ship the view : ; consignment. The exporter, with a shipment. In fulfilment of his contractual of the last date of goods on or before the expiry orien usually through bank, a documentary evidence ler has to send ea or Airway Bill depending upon the carrier used) indicating the date of er : (ett rt From the seller's point of view, the shipment so effected does not mean that the shih left the boundary of the country of the shipment, it only id have either sailed or means a the goods have been consigned by him within the date specified in the contract and he has thus fulfilled his contractual obligation. Right Time or at Required Time Lowest Total Cost : Physical Distribution is not merely a cost but it is also a potent tool in demand creation. The seller (exporter) can attract additional customers by offering better service or lower prices through Physical Distribution improvements. Itis, therefore, incumbent on the part of the seller to understand very carefully the physical distribution system well enough to balance the costs and effectiveness of Physical Distribution in relation to Marketing Strategy, Further logistics management emphasises the need to work out the cost of physical movement by considering the “Total Cost Approach” or “total distribution cost” or “total delivered cost” (TDC) approach. Basing the logistics plan decision on direct cost is erroneous because there are a number of cost elements which, though not obvious, vary with different components of logistics system. For example, freight cost of transporting a consignment is an obvious cost element. However, while making a choice for choosing a carrier (ship or aircraft), itis necessary to keep in view the other cost considerations as well. These cost elements, inter-alia, include the cost of capital invested in goods in transit, cost of packing, insurance premium, documentation cost etc, SYSTEM ELEMENTS OF MARKETING LOGISTICS Marketing Logistics or Trade Logistics consists of two main cc Supply (PS) or Materials Management Een cons Came aca concerned with inward and Physical Distribution (PD), wherein the formers movement of aw material, components and spare parts, consumable stores, machi a Ha ie na while the latter refers to that Part of the logistics system which increas ‘ ard movement of finished products from the exporter’s point to the ae ae fhe impor, The activities falling under PS and PD are 'son that in a maj meant ‘ajority of the cases, the outward nt or sirens eae of the products of Suppliers becomes the ae ply Sor consumer at the other end or ultimate destination Hi ote fenc —™ system elements of Marketing Logistics are common to both, namely, Physical Supply and Physical Distribution, as may be seen in the chart below (chart 1), Chart 1. 1: System Elements Common to PSM and PDM TRADE LOGISTICS I Physical Supply hn Management ile ee men Lo ~ = So ~N a / - = SS 7 Sources of Supply Va i | of Raw Material \ Plant | Customer Ne | Common System Elements . Raw Material Acquisition - Inventory Management - Warehousing . Packing and Unitisation . Transportation a Insurance - Communication & Control rials, components & parts, consumable stores and spares must be brought together in required quantities and at the appropriate time to support manufacturing system so as to have the benefit of uninterrupted production in accordance with the schedule worked out for export production. Besides, fuel, maintenance materials and Packaging materials needed for the production and packing of the finished product must be purchased, transported and stored in advance. The procurement or acquisition function of the exporting firm searches out the sources of supply both domestic as well as imported for the inputs needed. This calls for exercising a greater control over purchasing operations than the distribution activities since the former are key to the production schedule and thus are less exposed to the consumer demand which are encountered in the distribution of finished products. Raw Material Acquisition : Raw mate WAREHOUSING Warehousing is essentially a storage function and is very important from marketing point of view. In many lines of business, goods are produced considerably in advance of the time of sale and consequently they have to be stored for varying periods of time and thus bridging the time gap between production and demand. In case of agricultural products, production is seasonal and where because of climatic conditions only single cropping takes place and the entire year’s output comes to harvest in a short period, but the demand is spread over the year, storage facility has an important role. Warehouses may be Storage Warehouses or Distribution Warehouses. The basic difference in these two is that the former store goods for moderate to long period, while the latter receive goods from various company plants and suppliers and move them out as soon as possible. Functions of warehouse include receipt of goods, identification of goods by recording and numbering, sorting for appropriate storage, hold goods under protection until needed, marshal the shipment and prepare records and advice. Warehouses may also be used as physical Processing stations in the logistic system. For example, inventory may be held for ageing, a form of processing, and in certain cases minor assembly work, conditioning and adaptive work for special request. From the exporters point of view, choice of warehousing operations ranges from Owning, Renting, Leasing or Storing in transit and each of them have associated advantages and disadvantages, cost and control elements. Owning or a private warehouse has to be evaluated in terms of its utilisation and cost. A private warehouse means investing company's own Money for such a facility but at the same time the company has greater control over the warehouse operations and possibility of more stocking points and that near to the consumption centres may be advantageous from the point of quicker nee i: Ee one and therety creating place utility, but this adds to the cost of warehousing. a ae ' lion of Warehouses can give the customer better service and can also result ina r cl iy in transportation oa by moving carload, truckload, or bargeload quantities into the ae Therefore, Vile deciding about the number of locations, it must be ensured that a balance is struck betwee, the level of customer service and the cost of distribution. fit of getting closer to the consumption Centres developed in the vicinity of ports in a number, of countries, especially in the developed countries. Such bonded warehouses have been set yp either as private or public warehouses and the goods are kept there under Government bong and can be taken out only after applicable taxes and duties have been paid or when they are moved by a common carrier to another bonded warehouse or a custom area. The use of such warehouses may sometimes be made to store the goods imported into the country temporarily for transhipment or for consideration in a shipment going elsewhere. Sometimes, parts and semi-processed material brought into the country and kept under bond is used for completion of manufacturing operations or assembly prior to delivery to the customer or for shipment to another customs jurisdiction. Such warehouses have been found of greater use in case of timely supplies of quota products, besides, bonded warehouses are also used to store certain types of finished products such as tobacco or liquor on which there are heavy excise duties, since by doing so the producer may not be required to pay excise duties until the product is taken out from there for distribution. Inrecent times, with a view to gaining the bene the facilities of bonded warehouses have been PACKING AND UNITIZATION Packing and packaging play an important role in Physical Distribution System due to the reason that customer is interested in getting the product without any damage or loss. From marketing view point, packaging is associated with presentation and hence it should protect what it sells and the packaging should sell what it protects, but from the distribution logistics Point of view packaging should protect what it sells, minimise the cost of space utilisation. While preparing goods for shipment, care should be taken by traffic department that the same are properly packed, marked and labelled. It should also be ensured that packing must be strong enough to withstand the hazards of the journey and light enough to attract a minimum rt Cost, since the freight is usually chargeable on the basis of ‘Weight or Volume whichever ee Marking and labelling are considered as “passport” for smooth handling and Portation of cargo vis-a-vis for identification of packages and for providing Handling Instructions to the people involved ir e Ived in such activities at varic it ~ product in transit can be minimised, “arows pois 9 tet camage Now-a-days cep ae weet Unit loads is finding increasing acceptability especially in the shipment 0 go Comprising semi-manufactured, manutactured or semi-processed or processed products Such packing wherein small pa kages are put together to work out unit load of standard sizes move at a faster speed because of mechanized handling, besides, unit load technology has helped in the realisation of Jus In-Time delivery concept and thereby reduction in inventory and warehousing cost. Among the unit loads, pallets and containers have been found more useful for movement of goods in international trade, TRANSPORTATION i Transportation is the most important single element constituting the ‘hub’ of the whole logistics system on which the efficiency of other elements depends to a larger extent. It is an important responsibility in the Physical Distribution Management both from cost standpoint and from service standard. The most important aspect of transportation decision concerns such issues as what modes of transport should be used because it is the chosen mode of transport which can either make or mar the time and cost efficiency of all other elements of marketing logistics. The transportation function involves use of railroads, waterways, motor trucks, pipelines and airplanes. The decision with regard to selection of a particular mode of transport largely depends upon the nature and marketing characteristics of products to be moved from exporter to the buyer abroad. For perishable goods due to their short keeping life, the selection of mode will obviously go in favour of a mode with faster speed. -In case of goods moving i in larger quantities with low w per unit values and not amenable to quality deterioration, product development obsolescence etc, e.g. iron ore, coal and limestone, the decision regarding selection of a mode is influenced by cost consideration, because in the movement of such products the speed of the transport mode is not of much significance but the cost is certainly very important on which lies the exporter's competitive edge. The exporter has to keep in mind the buyer's requirement with regard to minimum landed cost. Yet another important aspect of decision making pertains to making use of own transport or to go in for contract carriage or common carriage. Possession of a fleet by exporter or buyer is ararity. Therefore, the exporter has to make a choice between contract carriage or common carriage. Contract carriage may be defined as one which does not have a schedule specifying the arrival and departure dates, does not operate on a pre-fixed route and also does not follow any published tariff giving rates as well as terms and conditions of carriage. The engagement of contract carriage is’ subject to negotiations, as is normally done in case of hiring a truck or chartering a vessel for movement of certain goods. As against that the common carriage Operates on the basis of scheduled service, with a pre-determined route and a published tariff Specifying the terms and conditions of carriage. The alternative choice of modes is between road, rail, air, water (sea) and pipeline, to some extent. Each of these has certain characteristics, e.g., road (truck) transport is a link between modes of transport and is also ideal for delivery of goods on door to door basis but sea ly costlier, while on the other, rail, in general, works out to be quite Conomi. ig Sera a goods but it is slow and a lot of uncertainty is associateg in ae delays in movement of freight traffic and allocation of wagons are some of the lim in case of rail transport. In choosing 4 transport mode for a particular product, the xpoy links irrespective of who pays for the outbound transportation must consider all transportation ve of wh , he or the buyer, since the cost of transportation link is a physical distribution cost, For te purpose of making a choice for selection of an ideal mode, the exporter may consi ea many as six criteria, namely, speed, frequency, dependability, capability, availability and oo Speed of the mode of transport is obvious in case of requirement of faster delivery and to have the benefit of same road and air transport or speed linked express trains are ideal and if the goal is low cost then water and pipelines are the prime contenders. So far as cost is concerned. it is of course a very important criteria and while considering this criteria, the exporter must think of cost of service consisting of not only freight charges but also the packing cost. terminal charges, insurance premium, pick-up and delivery charges, documentation cost ete In case of larger quantities of export goods, the payload capacity of the carrier is very important for achieving the benefit of lower per unit transportation cost. Recent developments in transport technology, especially the development of multimodalism where the movement of goods takes place in pallets, containers and barges, has given the option to make use of different combinations of transport modes with a view to gaining the benefit of speed as well as lower cost. The combinations like piggyback describes the use of rail and truck, fishiback refers to water and trucks, trainship refers to water and rail and airtruck combines air and truck. Of these, each coordinated mode of transportation offers specific advantages to the shipper. For example, piggyback is cheaper than trucking alone and yet provides flexibility and convenience MMUNICATION AND CONTROL. Information is the ‘lifeline’ of a logistic system because without accurate and current information, the system cannot respond efficiently. Besides, timely and correct information acts as a key component in the planning operation and control of logistics system. The system designer has to consider both the means by which the firm will receive order information from customers and will transmit that order information from place to place so that actions may take place and the means by which the firm will process this information at various stages to produce inventory postings, replenishment orders, manufacturing orders, demands and supplies etc. The problem of supplier should not merely be the general data processing but with that part of data processing which is occupied with in the handling of distribution systems information. Efficiency in information and control system is, therefore, very essential for the logistics information system of a firm. Traditional methods of communication comprise mails, telegrams and cables, telephones etc. but with the boom in computer and information technology (IT), there has been a revolution in receipt and processing of information for decision making in the logistics activities. The developments in IT has now made it possible to covert many of the problems in transportation. inventory management, packaging and warehousing into computer language by means of which the operation of the system as a whole can be examined through model building and simulation. The use of models and data available through computers permits the analysis of a number of alternatives and provides for an improved understanding of interrelated functions. The computers are also being used to ascertain performance standard in the flow cycle of products from raw materials to finished products at consumer points, as also for handling of many transportation documents in a routinised systems. Computers have, in fact, created an impact on making use of this technology for data processing. Some of the applications of this new tool are daily reports inventories and sales of chain and departmental stores, the handling of incoming orders in many different industries and their despatch to branch plants or the time between receipt of the orders and shipment. Thus the logistics information system has an intimate link with other major information systems ina business. For example, basic production, shipment, stock requisition and other transaction fecords are inputs to both the physical distribution control system and the cost accounting and control system. Shipment and invoice records are basic to both accounts receivable and Sales analysis system as well as to the physical distribution control system. The use of Electronic Data Interchange (EDI) - the modern concept of paperless trading system or transmitting of data and information from computer to computer — is increasingly being adopted in many countries round the world. EDI is one of the forerunners of the Electronics Commerce Technology which by definition means conducting Business Electronically. CHOICE OF MODES FOR HINTERLAND MOVEMENT OF EXPORT PRODUCTS ae — $= - The transport chain involved in the physical movement of the goods traffic in international trade comprises Of Hinterland transport and international transport systems. The organisations engaged in international trade, viz. export and import, are, by and large, not located in the vicinity of the ports but are usually scattered over in different parts of the country, as in India exports originate from the far flung places like Jaisalmer, Barmer, Srinagar, Agartala etc. The exporters, for getting the supplies of inputs, machinery, components, Parts, consumable stores and spares required for production of export products and subsequently for the timely delivery of finished products at the ports of loading so as to ensure timely delivery of the same at the ultimate destination abroad make use of inland transport or hinterland transport comprising of various sub-systems like road transport, rail transport, inland water transport, pipelines. air transport, multimodal transport etc. Although each mode has its own unique Economic, Institutional and Operational Characteristics, they all perform the same function, namely, to move goods as well as people from place to place. So far as the goods movement is concerned, the shippers will have to make some broad decision criteria for the modal choice, e.g., - The available modes of transport; ~ _ The required transport capacity; ~ The nature of the goods to be shipped; ~ The need for speed and reliability However, the choice of modes to be selected by exporter for the hinterland movement of xport products depends, to a large extent, upon the nature and the quantity of the products ‘obe moved as also the time available at his disposal, besides a host of other factors in which the cost is very important. It is also likely that in certain cases, the consideration may not be only the cost but other related factors. For example, for the delivery of perishable products, a faster mode of transport is needed, irrespective of the high incidence of freight cost. IMPORTANCE OF OCEAN TRANSPORT IN INTERNATIONAL TRADE The predominance of the ocean or sea transport over other modes of International Transportation system is due to the fact that shipping is the largest, most economical and environment friendly mode of transportation, especially in export and import trade, besides, the ships have the capacity of carrying a large array of items at comparatively cheaper freight rates over longer distances. As per a study reported in ‘UNCTAD Review of Maritime Transport — 1998’, about 95% of International Trade by volume, accounting for about 76% by Value, moves by sea routes establishes the predominance and importance of ocean transport in the physical distribution of overseas trade. GENERAL VIEW OF SHIPPING Shipping has developed as an industry of international character which is influencegpy > aspect of World Affairs, Political Strife, Environmental Lobbies, Commodity ang Tee ica Changes and Economic Growth In ancient times, seaborne trade used to be confined within coastal regions for transportay, of material from one region to another. Gradually, such trade expanded to longer routes destinations with the use of sailing ships. With the innovations of steam driven Ships in 19th century, seaborne trade received wider acceptance due to reliability and improvement in service, This new development not only culminated into changed ships design but also in the modes of transport which have emerged as a result of the developments over the Period areag under : OCEAN TRANSPORT DEVELOPMENT ‘Passenger | Conventional Unitized ] Specialised | Liner | Cargo Ships Cargo Ships Vessels -Cruize Liners | -Tramp - Pallet Vessel - Tanker with highest - Cargo Liner - Barge Carrier - Oil Carrier Standards of - Passenger/ LASH | Chemical Carrier luxury are Cargo Liner SEABEE Product Carrier available in the RO RO LPG/LNG Carrier world for - Container - Bulk/Ore Carrier high-end users. Ship - Grain Carrier - OiV/Bulk/Ore OBO SHIP TYPES The following types of ships have been in operation in the carriage of seaborne trade 1. Tramps : Those ships which are designed to carry no specific types of cargo and travel anywhere in the world. They are often run on charter to carry bulk cargo or general car? The bulk carriers have taken over much of the tramps, business in recent times. Cargo Liners : Such ships are designed to carry a variety of cargo between specific ports" fixed schedules. They generally cary general cargo both sem-manufactured and manutactred items packed in different types of packings. Many of these ships have refrigerate# compartments for transportation of Perishables like meat, fruit, flowers, fish etc. Passenger/Cargo Liners : These are similar to cargo liners except that accommodation (Including Lounges and Recreational Facilities) usually of a very high standard is provided for passengers Pallet Ships : Such type of ships are equipped with large twin hatches, side ports and cranes to allow pallets to be loaded or discharged through the side-ports and by crane. The pallets are moved by fork-lift trucks in between the upper decks and lower holds. Barge Carriers: There are two types of barge carriers, viz. LASH AND SEABEE The advantage of the barge carriers is that they do not require special port facilities. But because of the high cost of barges and other operational difficulties, such ships are being phased out Roll-on Roll-off (RO RO) Vessels Such type of vessels were developed initially for short sea transportation of containers but have since gained the reputation of being an economic system for ocean transport. Those ships require relatively little special port facilities and offer the potential of a truly door-to-door service. Container Ships : Container ships have been designed to carry maximum of containers within the designed length and breadth of the ship. Cellular container vessels are fitted with container guides that are capable of withstanding dynamic (accelerating) forces due to rolling, pitching and heaving. Tankers : Tankers are used to carry bulk liquid cargo, most common being sizes range from the very small coastal tankers to about 700,000 tons. Sp: from 12 to 16 knots. Bulk Carriers : These are single deck vessels designed for the carriage of single commodity, e.g. grain, sugar and ore in bulk. The deadweight capacities of such ships range from small to 150,000 tons and speeds range from 12 to 16 knots/hours. Oil/Bulk/Ore (OBO) : OBOs have a cross section similar to the general bulk carer. The structure is, however, significantly stronger because bulk heads must be oil-tight and double bottom must withstand the high density ore load. The special teature of these type of vessels is that they are designed for flexibility of operation andare able to transport any one of the several bulk cargoes on any one voyage. Other combination vessels are car-bulkers where removable car decks are fitted into normal bulk holds. As mentioned earlier shipping or ocean transport is an industry of International Character and is influenced by a host of factors. On the other side, the International Trade is also cyclical in nature, since there are fluctuations in the trends of trade and accordingly, the shipping industry cONTAINERIZATION & MULTI-MODAL TRANSPORTATION OF GOODS rRODUCTION [ : a dling of cargo moving in international trade in break-bulk form or in different types of d shapes used to take a considerably long time in loading and unloading operations atvarious intermediate points and at the ports. Consequently, the ship had to stay at the a longer time and this was causing concern to the shipowners and also to the traders ‘ost incurred by the shipowner ultimately passed on to the cargo belonging to The hank packings a" ts for since the extra C( the shippers (exporters and importers). This led to the development of unit load principle to reduce the ships time at ports. J in simple terms, is bulking the break-bulk cargo by combining small units of oad nto a single larger unit with a standard load size. Unitised cargo can be very simpie in example, strapping or binding together two or more boxes or any similar ite™ was made in the form of sling loads. Subsequently, a more advanced form o! came in the form of palletisation, in which different sizes of pallets are used for 929 catgo, depending upon the nature of cargo, e.g., boxes, bags and other types of packed ‘lems. A pallet usually consists two layers, one touching the ground and the other about “~5) above that on which the goods are loaded and secured with the help of straps oF aes ‘ype of material. The gap between the two layers is from all four sides so as (© pin insertion of forks of fork-lift truck for lifting and taking the pallet o another place 0n top of another loaded pallet. For making the pallet, the materials used include Wood cee oF other material. In unitisation, containerisation is the ultimate and the same Movidi 4 predominant form of unitized transport. The use of marine containers ams at ing -| Mer 9 Sealand through transport for various types of general cargo by means of an oe Standardised transport unit without need for the contents to be taken out for Princip ‘ed sn Toute. Containerisation has thus made it possible to realise the eae ig pe Of increasing the size of unit load and reducing the handling & transpo! ‘Cept is very simple in which the goods of any kind are packed in a container tan Y locattio "usually away from the waterfront. \dal transport c Containerisation is ina sense the central part of the total multimodal Port concepy, Sing daptable to multi-modal transport operations in internatign oF system is easily ai oe transport mode to another made commerce. It facilitates quicker transfer of cargo rom ane — ort. In the process, it integr coordinating and bridging across modes of transp Mates, a standardises the whole exercise of freight movement. Containerization has thus not reduced the different modes of transport to a common denominator but has also bro about revolutionary changes in the concept of general cargo handling and related Shipping ang port activities. The Container - Definition The Intemational Organisation for Standardisation (ISO) defines a freight container a. an article of transport equipment (i) of a permanent character and accordingly strong ENOUGH for repeated use; (ii) specially designed to facilitate the carriage of goods by one OF more m¢ of transport without intermediate reloading; (ii) filled with devices permitting its ready handii particularly its transfer from one mode of transport to another; (wv) So designed to be easy to jy and empty; (v) having an internal volume of 35.3 Cu.Ft.(1 cubic meter or more). Types of Containers Among the various types of containers used in international trade, the most commonly used containers are dry cargo containers, high cube containers, tank containers, reefer containers, open top containers, flat racks, and bulk containers. The ISO containers, according to their cargo carrying capacity, are put in three categories, namely, (i) the general cargo containers (ii) thermal containers, such as refrigerated or reefer containers, insulated containers and ventilated containers used for cargo requiring refrigeration or insulated storage; and (iii) special containers constructed to carry specialised cargo in bulk, e.g., foodgrains, fertilisers and liquids. Containers currently used worldwide are made of steel, aluminium and FRP plywood. Dimensions of a Container The dimensions of the ISO containers used in intemational commerce are as under : L B HorH Gross Weight wx 8g x 8 = 107 ao x og x 88-9) = 207 ee cae, x B(BY'-9) = OST ae ee x 8(8%'-9) = aor § 45) x 8 x g(By'-9) = ges prosorinart used by the trade are 20. and 40 ft containers, commonly referred si ‘tre reUs (Twentytoot Equivalent Units) and FEUs (fortytoot equivalent eae es ret uh containers ranges between 31.5 ~ 32 cm and 68 5 69 bm depending o terial used for making the container. upon mal ¢ of Container Technology aavantages ontainer technology as benefited the shippers, shipowners and the port authorities tre 0 , tages are as under y such advantag gome oS mtreduces transit time through quicker cargo handling. > ttensures substantial savings in packaging costs as pack. aging requirements of cargo carried in containers is meager. 3 tobviates the need for covered warehouses, since containers can be stored in the oper thereby reducing warehousing costs. 4. Iteliminates intermediate handling and permits the cargo to arrive in a better condition when compared with conventional cargo shipments. Problems & Challenges Though the container technology has been found advantageous so far as the carna general cargo in international trade is concerned due to container being the central part of the ‘otal multimodal transport concept, but from the developing countries point of view. there are several problems and challenges associated with this technology. Containerisation involves ‘heavy capital investments firstly in terms of the cost of ISO containers and ships anc secondly ‘ners of container handling equipment. Thus for the development of a multimodal transport system, the investments are required not only in acquisition of container ships, but also in rail ‘ats, tuck trailers, container boxes, terminals equipped with container handling gantry cranes Such as Portainers/transtainers, large container stacking yards, railway terminals for transter “perations, inland Container depots, container freight stations and mobile cargo/container by tong, ae Such as forklift truck and spreaders etc. For the movement of containers ’ Not only the roads, culverts and bridges need to be widened and strengthened, but mae endments in regulations governing movement of such unit of transport are also ‘obe made. —Unim, dal, Intermodal and Combined Transport Uni is omy anspor Means transportation of goods by one mode only where the carrier issues “through

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