LÝ THUYẾT

CHAP 6:
1. So sánh tính chất, điểm mạnh yếu của các transportation (air, truck, rail,…)?
Modes of Advantages Disadvantages
Transportation

Road The velocity of delivery is high in the Emissions of noise pollution and toxic
Transportation case of short distances. materials.
The door-to-door service is best for Possible traffic delays.
this mode of transportation. It is not suited for long distance as it is
It is very flexible in nature. not economical.
It helps to facilitate the movement of
Accidents and Breakdowns.
goods even in remote areas.
It provides alternatives in the form of
car, rickshaw, auto, cars, bus, trucks,
and so on.
It is good for transporting perishable
products.
It requires low capital investments

Rail Carrying capacity is pretty high. There is a strict and restricted

Transportation The rapid speed of delivery.
It is economical for long distances
because it can easily cover all area of
states and cities.
This means of transport is very faster
than roadways.
Most suitable for carrying a bulky
amount of goods and products.
It provides proper protection from
exposure to sun and dust pollutions.
(v) It is the most dependable means
of transport.
(vi) It is the very safest means of
transport.
timetable and routes.
Expensive cost for constructing and
maintenance.
(i) Huge capital required for
construction maintenance.
(ii) It is not suitable for hilly areas.
(iii) It is not flexible in nature.
(iv) The cost and time of terminal
operations are the major disadvantages
of rail transport.
(v) Monopoly in nature.
(vi) It consists much time for booking
of goods through the comparison of
road transport.
 (vii) Rail transport helps to provide
employment opportunities to both
skilled and unskilled individuals.

Water It has a high carrying capacity. It uses a high time for shipment.
Transportation Cost-effective for heavy and bulky The risk of accidents is pretty huge as
goods. the ship/boat could sink any time.
(i) It is the very cheapest or easiest (i) One of the drawbacks is there is a
means of transportation. delay in the movement of goods from
one place to another.
(ii) Goods in bulk are transported.
(ii) Performance is affected by
(iii) It promotes foreign
seasonal variations.
or international trade.
(iii) It can be used in a limited area of
(iv) It can easily carry a huge quantity
operations because it can only run on
of goods such as timber and coal.
seas or oceans.
(v) In comparison to other transport,
(iv) Water transport is very unsuitable
the risks capacity is very low.
for small businesses because it carries
a small number of goods.

Air It has high speed. It is the costliest out of all other modes
Transportation There is no physical barrier to this of transportation.
mode of transportation. It needs trained individuals for a
(i) Fastest means of transportation. successful flight.
(i) The large capital investment
(ii) Useful moving the goods in the
needed.
amount of bulk.
(ii) Not suitable for working goods.
(iii) Each and every area of
accessible. (iii) May be affected by rains.
(iv) Vital for national security and (iv) Risks of accidents are highest.
defense.
(v) This mode of transport requires a
(v) Very useful in earthquakes and specialized skill and a high degree of
other floods. training for its working operations.
(vi) It provides an efficient, regular,
and quick service.
(vii) It is very suitable for emergency
services
Pipeline Any weather statuses do not influence The type of cargo is limited.
it. It is an easy target for vandalism or
Natural route’s existence helps in terror attacks.
transportation. (i) It is not flexible in nature.
(i) They are very flexible in
(ii) It is restricted in a limited area of
transporting liquids and gases.
work.
(ii) It consumes low energy power.
(iii) Difficult to make security
(iii) It needs a limited area of arrangements for this transport.
maintenance.
(iv) Pipelines are very safe and
accident-free transport.

2. Những factors nào ảnh hưởng việc lựa chọn transportation

- Cost of transportation: When selecting the best and most suitable transport for
exportation of products, the budget is the most important consideration. Costs vary
based on the type and amount of goods needed to be transported. It is important to
keep in mind that the cost of transport influences the cost of goods.

- Reliabitily of service: When selecting the best and most suitable transport for
exportation of products, the budget is the most important consideration. Costs vary
based on the type and amount of goods needed to be transported. It is important to
keep in mind that the cost of transport influences the cost of goods.

- Safety: Another crucial factor influencing the selection of a mode of transport is the
safety and security of goods in transit. Land transport is more preferred to railway
transport because the losses are less.
From the safety point of view, sea transport is the most risky, as water transport
exposes the goods to the perils of sea, and the long duration of travel adds to the risk
factors. Certain types of packaging also helps in safeguarding the goods in transit and
are highly recommended, but they do influence costs as well.

- Characteristics of goods: cồng kềnh (tàu biển)

When selecting the mode of transport, the size and weight of goods play a crucial
role. Land and air transport primarily cater to fragile and small shipments. Rail and
sea transport are a more suitable option for heavy shipments.
How dangerous, high value the products are, also influences the selection of the
transport mode. For breakable and fragile, high value products, air and land transport
are the best option.
 - Budget: Transportation costs are add-on cost on the sale price of a product. The
transport costs add to how much the goods can be sold for, to make a profit. Hence
budget requirements need to be considered accordingly. The volume or weight of the
goods play a key role in determining which method of transport is the best value.
Also the type of good in terms of urgency of delivery, such as how perishable the
goods are, and how quickly they need to arrive, influences the choice of mode of
transport.

- Timescale: Air transport is the best option for long distances requiring urgent and
speedy transport, to meet deadlines or because the goods are perishable or fragile.
Motor transport is faster than rail transport for short distance deliveries. However, for
longer haul journeys rail is faster and more economical.

- Flexibility:
The most flexible mode of transport is Motor or road transport, as it is not constrained
by factors such as flight times, shipping routes or pre-scheduled timetables. Motor
transport can operate day and night, at personal convenience, to suit all time frames,
and has the added advantage of door-to-door delivery
Example: Chuyển mặt hàng từ Nhật Bản về thì đi bằng phương tiện nào

3. Incoterm: lựa phương thức nào có lợi cho mình (vai trò người mua và vai trò người
bán)
SELLER:

CFR-CIF: Cost and Freight - Cost, Insurance and Freight

The CFR Incoterm and the CIF Incoterm are generally good options for the seller as they’re
competitive and do not involve too many risks. Under these Incoterms, you have control over the
international shipping costs all the way to the destination port. This gives you the flexibility to opt
for more cost-effective shipping options such as the best routes, rates, and transit times.

DDP-DAP: Delivered Duty Paid - Delivered at Place

Under the DDP Incoterm and DAP Incoterm, the seller is responsible for delivering the goods to
the buyer’s warehouse or storage in the destination country. This means that since you will be in
control of a large part of the shipping process, including what happens in the destination country,
you should make sure that you’re familiar with the laws and regulations of the importing country.
Make sure your freight forwarder has presence in the destination country to help you faciliate
things.

These two Incoterms may seem to provide more control and competitiveness but this also means
greater responsibilities and risks especially when operating in a country you’re unfamiliar with.
FOB: Freight on Board
The FOB Incoterm is one of the most commonly-used Incoterm in an international sale. When
working under FOB, the seller is responsible until the goods are loaded onto the vessel at the port
of origin. This means you have very little control over shipping times and costs. However, this
may work for suppliers who prefer not to negotiate freight rates with their freight forwarders or
simply see no benefit in keeping track of the shipment.

BUYER:

FOB: Freight on Board

Under the FOB Incoterm, the seller/exporter will leave the goods at the port of origin, prepared
and ready for international transport. The exporter will have taken care of all formalities and
paperwork. You, as the buyer, will be in charge of hiring the international shipping services. This
gives you absolute control of all expenses and coordination of the cargo delivery to your final
destination. One strong advantage of choosing the FOB Incoterm is the flexibility it gives you.
You will be the one to choose the shipping routes and times and are able to negotiate prices with
your freight forwarder. This is the most recommended Incoterm for importers and buyers.

EXW: Ex Works
The EXW Incoterm is another good option for buyers. However, extra care should be taken when
trading under this Incoterm as it should be used only in cases where the buyer is familiar with the
import laws of the country. Your freight forwarder should also be present in the country to prevent
complications. If you’re not 100% comfortable and familiar with the laws and regulations, you
should avoid using the EXW Incoterm. In such a scenario, the better option would be to have the
goods to delivered at port, from where you can work with an agent of your provider to get them
delivered to the final destination.

DAP: Delivered at Place

The DAP Incoterm allows you to buy/import as cheaply as possible and it involves few
responsibilities and risks in general for the buyer. However, the disadvantage lies in not having
much control over the ocean freight. As a buyer, having the liberty to decide puts you in the driving
seat and allows you to save costs. Weigh the pros and cons properly before deciding on whether
this Incoterm is the best option as you may end up losing more than you gain simply due to the
lack of control.
 CHAP 7:
4. Làm sao để tính selling price? Cho ví dụ

5. Có bao nhiêu phương thức discount? Chọn 3 phương thức discount, giải thích và
cho ví dụ?
a. Cash discount
Cash discounts are granted by virtually every seller of industrial goods. The actual
discount terms are determined by individual trade custom and vary considerably. The
purpose of a cash discount is to secure the prompt payment of an account.

Example: A vendor might give a 2% discount on a 30-day invoice if the consumer

pays within the first 10 days of receiving the invoice as an example of a normal cash
discount. Giving the buyer a tiny monetary discount would help the seller get the
money sooner.

b. Quantity discounts
 Quantity discounts apply to particular quantities and vary roughly in proportion to the
amount purchased. Sellers grant such discounts because volume purchases result in
savings to the seller, enabling a lower price to the buyer. These savings may be
marketing or distribution expense or production expense

Example: If you order less than 48 t-shirts, the pricing per unit may be $7.50; $7.25
if you order 49-72 t-shirts; and $7 if you order 73 or more t-shirts.

c. Trade discounts
Trade discounts are granted by a manufacturer to a particular type of distributor or
user. They aim to protect the distributor by making it more profi table for a purchaser
to buy from the distributor than directly from the manufacturer. Manufacturers use
distributors in territories where the distributors can sell more cheaply than the
manufacturer. The distributor is granted a trade discount approximating the cost of
doing business to move goods through the channel.

Example: A green widget costs $2 at the store. ABC offers a 30% trade discount to
one reseller who orders 500 green widgets. As a result, the $1,000 total retail price is
 cut to $700, which is the amount ABC invoices the reseller. As a result, the trade
discount is $300.
d. Seasonal discounts

A discount is offering of a product or a service at a price lesser than the marked or the
original price. A seasonal discount is a discount which is offered on seasonal goods or
at particular seasons.
For example, there are discounts on products like automobiles, electronics etc. which
are offered during festive seasons like Diwali, New year etc.

e. Special allowances
 CHAP 8:
1. Chọn supplier
2. Có bao nhiêu bước để evaluate and select supplier
 CHAP 11:
1. Tại sao phải sourcing (quality, innovation, cost)? Những barrier của sourcing
 2. Letter of covering (LC) là gì?

Features / Characteristics of letter of credit

Negotiability

A letter of credit is a transactional deal, under which the terms can be modified/changed at the
parties’ assent. In order to be negotiable, a letter of credit should include an unconditional
promise of payment upon demand or at a particular point in time.

Revocability
A letter of credit can be revocable or irrevocable. Since a revocable letter of credit cannot be
confirmed, the duty to pay can be revoked at any point of time. In an irrevocable letter of
credit, all the parties hold power, it cannot be changed/modified without the agreed consent of
all the people.

Transfer and Assignment

A letter of credit can be transferred, also the beneficiary has the right to transfer/assign the LC.
The LC will remain effective no matter how many times the beneficiary assigns/transfers the
LC.

Sight & Time Drafts

The beneficiary will only receive the payment upon maturity of letter of credit from the issuing
bank when he presents all the drafts & the necessary documents.

Documents required for a Letter of Credit

• Shipping Bill of Lading

• Airway Bill
• Commercial Invoice
• Insurance Certificate
• Certificate of Origin
• Packing List
• Certificate of Inspection

How does Letter of Credit Work?

LC is an arrangement whereby the issuing bank can act on the request and instruction of the
applicant (importer) or on their own behalf. Under an LC arrangement, the issuing bank can
make a payment to (or to the order of) the beneficiary (that is, the exporter). Alternatively, the
issuing bank can accept the bills of exchange or draft that are drawn by the exporter. The
issuing bank can also authorize advising or nominated banks to pay or accept bills of
exchange.

Fee and charges payable for an LC

There are various fees and reimbursements involved when it comes to LC. In most cases, the
payment under the letter of credit is managed by all parties. The fees charged by banks may
include:

• Opening charges, including the commitment fees, charged upfront, and the usance fee
that is charged for the agreed tenure of the LC.

• Retirement charges are payable at the end of the LC period. They include an advising
fee charged by the advising bank, reimbursements payable by the applicant to the bank
 against foreign law-related obligations, the confirming bank’s fee, and bank charges
payable to the issuing bank.

Parties involved in an LC

Main parties involved:

Applicant An applicant (buyer) is a person who requests his bank to issue a letter of credit.
Beneficiary A beneficiary is basically the seller who receives his payment under the process.
Issuing bank The issuing bank (also called an opening bank) is responsible for issuing the
letter of credit at the request of the buyer.
Advising bank The advising bank is responsible for the transfer of documents to the issuing
bank on behalf of the exporter and is generally located in the country of the exporter.
Other parties involved in an LC arrangement:

Confirming bank The confirming bank provides an additional guarantee to the undertaking of
the issuing bank. It comes into the picture when the exporter is not satisfied with the assurance
of the issuing bank.
Negotiating bank The negotiating bank negotiates the documents related to the LC submitted
by the exporter. It makes payments to the exporter, subject to the completeness of the
documents, and claims reimbursement under the credit.
(Note:- Negotiating bank can either be a separate bank or an advising bank)
Reimbursing bank The reimbursing bank is where the paying account is set up by the issuing
bank. The reimbursing bank honors the claim that settles the negotiation/acceptance/payment
coming in through the negotiating bank.
Second Beneficiary The second beneficiary is one who can represent the original beneficiary
in their absence. In such an eventuality, the exporter’s credit gets transferred to the second
beneficiary, subject to the terms of the transfer.

Letter of Credit - Process

The entire process under LC consists of four primary steps:

Step 1 - Issuance of LC

After the parties to the trade agree on the contract and the use of LC, the importer applies to
the issuing bank to issue an LC in favor of the exporter. The LC is sent by the issuing bank to
the advising bank. The latter is generally based in the exporter’s country and may even be the
exporter’s bank. The advising bank (confirming bank) verifies the authenticity of the LC and
forwards it to the exporter.

Step 2 - Shipping of goods

After receipt of the LC, the exporter is expected to verify the same to their satisfaction and
initiate the goods shipping process.
Step 3 - Providing Documents to the confirming bank

After the goods are shipped, the exporter (either on their own or through the freight
forwarders) presents the documents to the advising/confirming bank.

Step 4 - Settlement of payment from importer and possession of goods

The bank, in turn, sends them to the issuing bank and the amount is paid, accepted, or
negotiated, as the case may be. The issuing bank verifies the documents and obtains payment
from the importer. It sends the documents to the importer, who uses them to get possession of
the shipped goods.

Letter of Credit with Example

Suppose Mr A (an Indian Exporter) has a contract with Mr B (an importer from the US) for
sending a shipment of goods. Both parties being unknown to each other decide to go for an LC
arrangement.

The letter of credit assures Mr A that he will receive the payment from the buyer and Mr B that
he will have a systematic and documented process along with the evidence of goods having
been shipped.

From this point on, this is how a letter of credit transaction would unveil between Mr A & Mr
B:-

• Mr B (buyer) goes to his bank that is the issuing bank (also called an opening bank) and
issues a Letter of Credit.

• The issuing bank further processes the LC to the advising bank (Mr A's bank).

• The advising bank checks the authenticity of the LC and sends it to Mr A.

• Now that Mr A has received the confirmation he will ship the goods and while doing so
he will receive a Bill of Lading along with other necessary documents.

• Further, he will send these documents to the negotiating bank.

• The negotiating bank will make sure that all necessary requirements are fulfilled and
accordingly make the payment to Mr A (the seller).

• Additionally, the negotiating bank will send all the necessary documents to the issuing
bank.

• Which again the issuing bank will send to Mr B (Buyer) to confirm the authenticity.

• Once Mr B has confirmed he will make the payment to the issuing bank.
• And the issuing bank will pass on the funds to the negotiating bank.