The Role of Logistics and International Transport Part I

The Role of Logistics and International
Transport
Part I
IQS School of Management

INTERNATIONAL TRADE
Fall 2020
1. Definitions & Introduction
2. Transport types
1. Truck
Summary 2.
3.
Train
Boat
4. Air
Josep María Cervera & Jan Jonckheere, IQS International Trade. 2

Why is it important?
What do
you think?
3
Logistics
Definition Logistics : the process of planning, implementation and control
of procedures for efficient and effective transportation and storage of
goods, including services, and related information from the point of
origin to the point of consumption in order to comply with the Customer
requirements.
Incoming material (inbound)
Outgoing material (outbound)

Logistics
Logistics involves getting
 the right product

 In the correct way (*)
 in the right amount and
 with the right quality
 to the right place
 on the right time
 to the right client
 at the right cost
And
 if there is any problem or inconvenience, the product can be returned / replaced easily (reverse logistics)
*: in the correct way: with the maximum respect for the environment, and respecting as the (ethical) rules of doing business

Logistics

Supply Chain
“The system of people and things that are involved
in getting a product from the place where it is made
to the person who buys it”
Cambridge Dictionary
Fall 2020 Josep María Cervera & Jan Jonckheere, IQS International Trade. 7
Transport
“The movement of people or goods
from one place to another”
Cambridge Dictionary
Just bear in mind, according to the previous definitions, that in international business, in
99% of the cases transport from A to B needs using different transportation means.
Fall 2018 Jordi Aznar Peyra. IQS International Trade. 8

Transport
How
HOWto
to carry a merchandise
carry merchandise?
Packs:
Bulk cardboard boxes, Containers
bags, wooden
boxes, etc
Josep María Cervera & Jan Jonckheere, IQS International Trade. Fall 2020 9
Bulk
 Cheap in variable cost
• No need of intermediate packing
• = less time packing, less people needed, less
material to be bought
• More space
 Expensive fix cost (especially dedicated means of

transport)
 Although sometimes, fix cost was also zero, like

timber in the river. (Remember: water were the
highways of the past?)
Examples: iron ore in the Great Lakes, grain,

timber, oil tankers
Fall 2018 10
Josep María Cervera & Jan Jonckheere, IQS International Trade.
Packs
Packs
• Time to load.
• Even for humans & planes it is difficult (many
Airlines try different things: 1st back rows, 1st
window seats, first…)
• Charging is a fine technique
• Not just to make more things fit, but also for
weight equilibrium, critical for planes or boats

International Transport
Some important inventions in goods transport history:
• The pallet
• The pallet Jack
• The forklift truck
• The container
Two way vs
four way
entry
Reversible
vs non-
reversible
The container
Container
• Why was the container invented?
• To avoid the bulk breaking problem
• Bulk breaking (Spanish: ruptura de carga,
French: rupture de charge): when, in the
course of a trip from A to B, goods need to
be unloaded individually from a transport
and then reloaded to another
• Ways to avoid breaking loads: putting
trucks inside boats. Seems too expensive,
but it was done in the Easter US coast.
• Then Malcom MacLean, an American
truck owner, decided in 1956 to take out
the engine part of the truck, leaving the
trailer. The idea of the container was born.
Container
• Now, the exterior is not adapted to the product.
• It’s the other way round
• The product adapts to the box used to ship it
• 8 locking corners (to stack them with other containers & facilitate manoeuvring)
• The box is always the same: called a container
• Therefore, it allows STANDARDIZATION
• With STANDARDIZATION, comes MULTIPLICATION
Containers are one of the images of globalization
• Main measures:
Long Wide Height Volume
20” 6m 2.4m 2.6m 37 m3
40” 12m 2.4m 2.6m 75 m3
• Production cost 20”: USD 1,400 approx.

• Life: 15 years approx.
• ISO rules
(although apart from 20” and 40”,there are other measures)
• Quite secure, easily locked
• Therefore, low insurance cost
• Pack once, and then move around the Globe
International
Transport
Loading a container
When warehousing, you prepare your pallets according to the
containers (height).
Before the container arrives, you put it on the floor exactly the way it
has to be loaded.
28
Comparison
Bulk Packs Container

Pros Cheap cost when using it in From origin to destination Good for long distances
big quantities Good for big quantities
Space optimization Good to reduce prices
Intermodality
Can get up to the factory door
Cons Needs the whole transport Needs to be handled one by one at Cannot reach a person user
mean to be adapted to it every change of transport
High cost in constructing it
Comparison
Transport TEU Increase
1 truck 2
1 plane 8 (Beluga: 36) x4
1 train 400 x 50
1 boat 20,000 x 50
• A 20” container is 6m long

• A train with 400 TEU is 400*(6+1,5)= 3,000 m = 3 km long
• A boat with 20,000 TEU would be, if aligned, 150km long
Fall 2020 31
Transport types
in EU trade
Figures based on value, 2016

Source: European Commission, Eurostat
Economies of scale
• Back to this picture
• Think that 1 container means 1 truck
• 23 * 11 * 23 = 5,819 containers seen,
plus below deck: 7,500 total
• 1 crew (20 people) instead of 7,500

truck drivers, 7,500 paperworks, 7,500
tanks to fill with gas….
• Plus the reduced cost of fuel: for a

same load, much less energy to carry
it on sea that on road
Intermodality
• Can be put on a truck, on a train, on a boat (and on airplane, but containers are different)
• It as become so important, that now it is a measuring unit per se:

TEU (Twenty Feet Equivalent). Companies talk about “containers”, “TEU”, etc, the same way
that talking about m3 or kg or USD of merchandise
• Twist lock to keep the containers together:

Not only intermodality, but stackability
Intermodality
• Cranes
• From train to truck
• From port to boat
• Using the same subjection tools that are
used to stuck them together on sea

Importance of cargo subjection
(in & out)
Stowage factor
• Ratio weight / volume
• How much weight per cubic meter (kgs/m3)
• Especially important in airfreight, but also in order
to organize containers in a boat
• Stowage factor is higher for dense materials (iron
ore, etc)
• Stowage factor acceptance is higher for boats,
lower for planes
• It can be a measure used by ship designers:
depending on your ship / container resistance and
the stowage factor of the merchandise, you can
stow to the maximum volume or not
Factor de Estiba – Stowage Factor
• Air freight 1 cbm : 166,66 kg
• Sea freight 1 cbm : 1 Ton.
• Road 1 cbm : 333,33 kg
• Railway 1 cbm : 250 kg.

Factor de estiba / Stowage factor Pes /Weight
Volum / Volume
20 60
19
18 55
17 50
16
15 45
14
13 40
12 35
11
10 30
9
8 25
7
6
20 You may find some
5 15 transport companies
4
3 10offering at 250kg/m3!!!
2 5
1
0 0
5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100%
Stowage factor
• Road 1 cbm : 333,33 kg
In international transport, you always look at both volume and

weight:
 If weight > volume => Freight will be calculated on the basis of

weight
 If volume > weight => Freight will be calculated on the basis of
volume (=volumetric weight)
Stowage factor
• Road 1 cbm : 333,33 kg

weight:
FREIGHT IS HOWEVER ALWAYS CALCULATED ON BASIS OF WEIGHT:

Weight may or may not be recalculated from volume
Stowage factor
• Road 1 cbm : 333,33 kg
In international transport, you always look at both volume and weight:
Example:
Maritime transport:
2 Europallets of 1,50m high, weight 175 kg each pallet:
Weight: 2 x 175 kg = 350 kg

Volume: 2 x (1,2x0,8x1,5)x1000kg = 2x(1,44m3)x1000kg = 2880kg
Stowage factor
• Road 1 cbm : 333,33 kg
Example:
Air transport:
5 boxes of each 40cm x 20cms x 50cms, 8 kgs each

Weight: 5 x 8 kg = 40 kg
Volume: 5 x (0,4x0,2x0,5)x166 = 33,20kg
Stowage factor
• Road 1 cbm : 333,33 kg
Exercise
Road transport:
3 europallets of each 450kgs, 1,2m high

What is the weight and the volumetric weight?
3x450kgs = 1350kgs
3x(1,2*0,8*1,2)*333,33 = 1150 kgs
3 x 1,15 x 333,33 = 1150 kgs
Stowage factor
• Road 1 cbm : 333,33 kg

weight:
Exercise Now imagine your pallets

only weigh 225kgs.
Road transport:
Weight: 3 x 225 kgs = 675 kgs

Volumetric weight:
3 x (1,2x0,8x1,2) x 333,33 =
3 x 1,15 x 333,33 = 1150 kgs (with 333,33kg)
3 x 1,15 x 250 = 862,5 kgs (with 250kg)
Transport types
There are several ways of transportation:
 Land route
 Seaway
 Multimodal transport
Airway
 Railway track
 Transport by pipeline
 Online transport (software)
Truck
You’ve seen them all
Jordi Aznar Peyra. IQS International Trade. Fall 2018 48

Truck
Very regulated sector!!!
Truck
 Security
 Intensity of traffic
 Quality of work (social
aspects)
 Environment
Truck
Road taxes!!
Highway toll!!
Truck
Types of services: Truck
 Groupage (partial load, LCL)

 Full load (FLC)
 Regular transport
 Dedicated transport
 Private transport; multiple drop transport
Truck
Truck
Truck
Truck
Fixed versus variable costs:
Fixed:
- Amortizations and depreciations
- Salaries and work related expenses
- Insurances
Variable:
- Fuel
- Highway toll Calculated per km/mile
- Maintenance
- Alloy wheels
Truck
Freight is calculated taking into consideration:
 Distance
1 cubic meter
 Weight/volumetric weight
=
 Taxes
333,33 kgs
 Manipulation
(may be 250
 Waiting times
kgs)
 Special services/necessities
 Type of goods (f.i. refrigerated, wine,..)
Truck
 Flexibility
 Door to door
 Speed
 Intermodality
 Traceability thanks to GPS
 Can adapt itself for JIT
 Strongly regulated
Truck
 More accidents
 Not environmentally friendly
 Higher average fuel consumption
 Traffic jams
 Not efficient (yet) – too many empty
trucks on the roads
Truck
 Do you subcontract your transport or you create your own fleet of
trucks?
 Or do you go for a mix?
Road transport is the only transport method which you can manage
yourself as a company.
To take into account:

• Fixed (investments) and variable
costs
• Closed circuit or not (empty trucks?)
• Seasonality
• Availability and flexibility (what if
suddenly demand increases or falls)?
• Human resources (you are legally
binded by the same laws)
• Image/publicity
Truck
Freight costs:
Ask up the contact
1. Tariffs data of the
correspondents!!
• Usually for groupage
• Fixed routes
• Work a lot with local correspondents
• Watch out with pick up (in center of a city, with elevator system or not,…)
2. On demand quotation (some transporters refuse to give pricelists)

• For bigger volumes, pallets or complete truck loads
Truck
Truck
Truck
Metro lineal: when

you can not put
weight on top of
another pallet.
Conversion factor:
1750kgs
Volumetric weight =
(LxWXH(o 2,4))*1750
TIR- Transports Internationaux Routiers
• UN based, International road transport convention
• 1949, then 1959, then 1975
• 75 countries
• It allows to avoid the big gap in road transport versus sea and air: border crossing
• Thanks to TIR, vehicles and containers with customs seal can transit through countries without
being opened at borders

Route transport document:
CMR
Certificat Marchandise
Routier
Fall 2018
Truck
The future?
 Trucks on environmentally
friendly fuel
 Gas
 Batteries
 Hydrocells
 Autonomous trucks
 Road transport combined with
railway transport
 Platform integrators
(transporters will carry
merchandise of other freight
forwarders from the same
platform in order to avoid to
carry “air”
Truck

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The Role of Logistics and International

IQS School of Management

1. Definitions & Introduction

Josep María Cervera & Jan Jonckheere, IQS International Trade. 2

Incoming material (inbound)

Outgoing material (outbound)

Josep María Cervera & Jan Jonckheere, IQS International Trade. 4

 the right product

Josep María Cervera & Jan Jonckheere, IQS International Trade. 5

Josep María Cervera & Jan Jonckheere, IQS International Trade. 6

Fall 2018 Jordi Aznar Peyra. IQS International Trade. 8

 Expensive fix cost (especially dedicated means of

 Although sometimes, fix cost was also zero, like

Examples: iron ore in the Great Lakes, grain,

Josep María Cervera & Jan Jonckheere, IQS International Trade. 12

Some important inventions in goods transport history:

Containers are one of the images of globalization

• Production cost 20”: USD 1,400 approx.

Bulk Packs Container

High cost in constructing it

• A 20” container is 6m long

Figures based on value, 2016

• 1 crew (20 people) instead of 7,500

• Plus the reduced cost of fuel: for a

• It as become so important, that now it is a measuring unit per se:

• Twist lock to keep the containers together:

Josep María Cervera & Jan Jonckheere, IQS International Trade. 35

• Air freight 1 cbm : 166,66 kg

• Sea freight 1 cbm : 1 Ton.

• Road 1 cbm : 333,33 kg

• Railway 1 cbm : 250 kg.

In international transport, you always look at both volume and

 If weight > volume => Freight will be calculated on the basis of

In international transport, you always look at both volume and

FREIGHT IS HOWEVER ALWAYS CALCULATED ON BASIS OF WEIGHT:

In international transport, you always look at both volume and weight:

2 Europallets of 1,50m high, weight 175 kg each pallet:

Weight: 2 x 175 kg = 350 kg

In international transport, you always look at both volume and weight:

5 boxes of each 40cm x 20cms x 50cms, 8 kgs each

In international transport, you always look at both volume and weight:

3 europallets of each 450kgs, 1,2m high

In international transport, you always look at both volume and

Exercise Now imagine your pallets

Weight: 3 x 225 kgs = 675 kgs

There are several ways of transportation:

You’ve seen them all

Jordi Aznar Peyra. IQS International Trade. Fall 2018 48

Very regulated sector!!!

 Groupage (partial load, LCL)

Fixed versus variable costs:

Freight is calculated taking into consideration:

To take into account:

2. On demand quotation (some transporters refuse to give pricelists)

Metro lineal: when

Fall 2018 Jordi Aznar Peyra. IQS International Trade. 70

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