Difference Between Logistics, Supply Chain and Transport.

Many professionals and new comers in the field of Logistics and Supply Chain get always confused regarding these terms and always asking about the actual difference between them. Here is this video I will discuss all the three terms and detailing the correct difference between them.
If you think this video is really helpful for you then please subscribe my channel and see many videos related with Logistics, Supply Chain and Transport. These videos are very useful for professionals, students and new comers in the field of Logistics and Supply Chain Management.

Assignments on Documentation and Liabilities

Social medias are full of unnecessary discussion and thoughts. Every people on the social medias are claiming their ability fake but some of them are true also. Blog is original image of public qualities and their abilities.
So I am posting here an assignments for all Logistics Professionals, students and teachers. Please solve these question which are very important to check your abilities.

Models in Logistics Management

Various quantitative models from the Operation Research Literature can be used to address the decision areas in Logistics.

Location models:- These models help in planning the optimal location of plant or warehouses, considering the inbound and outbound transportation costs and infrastructure cost at the locations. 

• Allocation models:- These models help in optimally allocating commodities from sources to destinations in a multiple sources, multi destination environment. The costs consider for optimization are the production cost, transportation cost and warehousing.
• Distribution network design models:- These models are usually comprehensive in nature deciding between a two, three or even four stage distribution network, location of warehouses and break bulk points and sometimes even the transport mode choice.
• Inventory models:- Inventory models play a key role in Logistics Management. The inventories that are directly affected due to outbound logistics are 

1. Finished Goods Inventory
2. Pipeline Inventory
3. Warehousing Inventory
4. Retail Inventory

The typical cost trade-offs between inventory and other decisions in Logistics would be

1. Inventory vs Transportation Costs
2. Inventory vs Stock out Costs
3. Inventory vs Spoilage and Materials Handling Costs

• Routing models:- These models allow optimal routing on a transportation network from a given source to a destination. The simplest model is scales the Shortest Path Problem.

If you want to do more discussion about this topic the join our Online Classes of Logistics Management. Classes are clearly distributed as per the need of your's. You are welcome to enjoy Assignments, Workshop, Lessons and Forums are free of cost. You have to pay only for our one to one or group Online Tuition Classroom if you wish to join.

Applicability of UNCTAD/ICC Rules

 Applicability for Multimodal Transport Document :- 

These rules apply when they are incorporated, however this is made, in writing, orally or otherwise, into a contract of carriage by reference to the “UNCTAD/ICC Rules for Multimodal Transport Document” , irrespective of whether there is a Unimodal or a Multimodal Transport Contract involving one or several modes of transport or whether a document has been issued or not.

Whenever such a reference is made, the parties agree that these rules shall supersede any additional terms of the Multimodal Transport Contract which are in conflict with these rules, expect insofar as they increased the responsibility or obligations of the Multimodal Transport Operator.

Multimodal Transport Contract means a single contract for the carriage of goods by at least two different modes of transport and Multimodal Transport Operator means the person who concludes a Multimodal Transport Contract and assumes responsibility for the performance thereof as a carrier. 

But if the goods have not been delivered within 90 consecutive days following the date of delivery determined according the rules the claimant may in the absence of evidence to the contrary, treats the goods as lost. 

Systems of Customs Security Arrangements

Customs Security is usually composed of two elements :- 

-----  A requirement for a financial guarantee to be established in the transit country by the party responsible for the transit operation to meet possible claims by the Customs, coupled with

-----  Physical measures taken by the Customs to verify that the goods are eventually re-exported.

Under the TIR guarantee system, each contracting party designated a national guaranteeing assosiation, which undertakes to act as a guarantor for all TIR carnets used for transit on the territory of the country,

Regardless of whether the carnets have been issued by the association itself or by association of other countries which are parties to the TIR Convention.

All these associations form a chain in which members are linked to each other through an International Organization, which is the International Road Transport Union (IRU).

Reference to Customs Security Arrangements in the MT Convention was limited to the following .

-----  A financial guarantee, if required, should be provided to the satisfaction of Customs authorities under regulations in force in the transit country and under International Conventions.

-----  The guarantee should cover import/export duties and taxes chargeable, and in countries where they are covered by guarantees, any penalties due, and

-----  The system of guarantees should be simple, efficient and inexpensive. 

Trade Logistics

Trade Logistics is a chain of series of links and interfaces with potential for value addition. The difference between the revenue earned by a business enterprise and the cost of bought-in materials, services and components, represent the value which a firm adds by the process of production. The value added concept is also important in that it helps in measuring productivity and profitability of an enterprise, its impact on the national economy and keeping in focus the sources of comparative advantage like logistics, marketing, sales and service.

Through optimization which is the essential function of logistics, many nations like new big economic nation India and China, also developed nation like USA and western European nations and Japan have benefited by :-

-----  Selling service rather than remaining content with the price of exporting.

-----  Simplifying documentation, customs clearance and payment formalities.

-----  Offering varied choice of delivery terms.

-----  Increase in the size of export orders.

-----  Harnessing professionals knowledge and expertise to exercising model options, cost and time trade offs.

-----  Proactive rather than reactive approach to international trade logistics.

Logistics plays a significant  role in the developed economies with its importance growing pari pasu with the increase in the share of services as compared to manufacturing .

Forecasts for Containerisable and Breakbulk Traffic

Traffic Forecasts :-

In traffic forecasting two methods can be resorted to, which as may appear are not mutually exclusive.
These are :-

-----  trend analysis and extrapolation.

-----  trade projections based on economy of the country and are done on the basis of actual economics parameters.

Both methods applied mechanically and in isolation can lead to very unrealistic figures. Normally trade forecasting will start with the trade statistics of the previous years preferably in both value and volume terms.

Port statistics may be helpful in other cases but in the context of LLCs where the serving ocean ports may not have the country-wise exports, this method will not help to allow analysis of trend, a run of figures is needed and the period should be preferably at least as long as the forecasting period.  

The economists approach in trade forecasting would tend to categorize commodities according to their economic properties .

A clear cut distinction has to be made between exports and imports. The export would be divided into agricultural and industrial products, each group being further broken down into main commodities.

Similarly , imports can also be divided according to their economic properties .
Such as :-

-----  Consumer goods.

-----  Intermediate products.

-----  Capital goods.

However as already mentioned, trend extrapolation used for long term forecasting can be extremely misleading. Therefore after acquiring a general idea of growth trends, economic parameters may be introduced to formulate more realistic relationship would be quite different for imports and exports.


 

Lay Time in Shipping

In a voyage charter the time spent by the vessel at the port is, of particular importance to the owner because the freight is fixed only with reference to the quality of cargo carried and any undue detention during which he continues to incur fixed overhead charges such as depreciation, insurance, interest on invested capital, wages etc. would reduce his calculated profit.

An important clause in the charter party is therefore the one stipulating the maximum time to be allowed for the cargo loading and discharging operations, that is Lay Time.

The provisions of the charter party usually state that lay time is to commence at a specific time after notice of readiness has been given.

The cancelling date is applicable to the loading port only and is the absolute last day under the terms of the charter party on which the charterer is obliged to make use of the vessel.

Lay Time may be expressed as the maximum number of days allowed for loading and discharge or as loading/discharge rate like an example 1500 tons/200 tons per day.

Demurrage is the compensation to which the owner is entitled for detention of a vessel beyond the agreed lay time.

The voyage charter party usually provides for payment of dispatch money to the charterer for the time that is thus saved. In other words, dispatch money is opposite to demurrage and is the compensation payable to the charterer for completing loading and discharging faster than stipulated under the charter party.

Time Charter in Shipping

Time Charter in Shipping is usually restored to when the charterer desires to operate a vessel for a period of time without undertaking either the financial commitments of ownership or responsibilities of navigation and management of the vessel.

Point of difference between time charter and voyage charter is the basis of calculating hire or freight . In the case of voyage charter freight is paid on the cargo carried and is directly proportionate to the volume of the cargo. In the case of time charter, the volume of cargo has no relation to the charter hire which is fixed on the basis of carrying capacity of the vessel and is directly proportionate to the period of charter .

Followings are the clauses contained in the time charter party usually related to :-

-----  Description of the vessel name, flag, ownership, class, gross and net registered tonnage, cargo capacity, indicated horse power and speed, bunker consumption, etc.

-----  Rate of cahrter hire and mode of payment.

-----  Charter period and redelivery of the vessel.

-----  The charterer's right to direct the vessel in regard to the voyage it shall perform and the cargo it shall carry.

-----  Allocation of operating cost - The owner has to pay running expenses like wages, provisions, insurance, stores etc. and charterer has to pay other expenses like bunker and waters, port charge , canal passing charge etc.

-----  Owner's indemnity against liability incurred under bill of lading.

-----  Liability for damage to the vessel - while the owner is responsible for maintaining the vessel in an efficient  state during the currency of the charter and has therefore to assume responsibility for any damage sustained in connection with navigation, the charterer is to be responsible for any loss or damage caused to the vessel or owners by improper loading or unloading of goods or any negligent act on the part of the charterer or his servant.

-----  Off-hire or suspension of hire during period of inefficiency of the vessel.

Bare Boat Charter

 


Bare Boat Charter is also known as Demise Charter. This is a type of contract under which the owner provides the service of vessel to the Charterer for a period of time in return for charter hire. For all practical purpose, charterer acts as the owner of the vessel during the period of charter but without undertaking the financial commitments of ownership.

The Bare Boat Charter party commonly used is the standard "Barecon" charter party. The charter party usually contains clauses relating to;

1)  Description of vessel - such as size, speed, fuel consumption, loading capacity etc. on which the performance will be depend.

2)  Survey to be carried out on delivery and re-delivery.

3)  Inventories of stores to be taken on delivery and re-delivery.

4)  Charter period - usually a provision of included giving the charterer the option of extending the validity of the charter by a specified period.

5)  Rate of charter hire and mode of payment. This is usually computed on the deadweight tonnage of the vessel per month and is payable every month in advance.

6)  Maintenance and operation during period of charter - The vessel to be at the disposal and under the complete control of the charterer who will be responsible, for supply of crew officers, stores, provisions, bunkers etc. and for all other items of operational costs including insurance. 

Sometimes, Bare Boat Charter serves as "hire/purchase" contract .

Under such a contract , the owner/seller retains formal ownership and thereby security in the vessel until the full purchase price is paid .

Decision Areas In Warehousing

 


There are two important decisions in Warehousing. Which are as follows :-

A)  Warehousing Location : The following factors influence the location of a warehouse:-

------  Transport facilities available.

------  Transportation cost of serving the market area.

------  Transportation cost of supply to the warehouse.

-----  Product price, customers' expected level of service and the resulting inventory carrying costs.

-----  Exise duties and other taxes assesed in the area.

-----  Labour supply and costs.

-----  Land and construction cost.

-----  Availability of power, water and communication.

-----  Climatic conditions.

-----  Attitude of residents and government towards the establishment of the warehouse.

-----  Potential for future expansion.

-----  Location of warehouse of competitors.

B)  Own versus lease versus use Public Warehouse :-

A warehouse may be privatly used or publically used . If a company makes goods and these are stored exclusively in some warehouse, then such warehouse known as Private warehouse.

A private warehouse may an owned or leased one .

If a warehouse is used on the basis of some terms and conditions by many users, then that warehouse is known as Public warehouse.

Paperless Trading

Paperless trading is done by Electronic Data Interchange (EDI). EDI is a very important Part of Modern Trade and Logistics.  Evolution of data elements that can be transmitted electronically to interchange trading information such as invoice etc. have been part of this development.

Advantage of Paperless Trading :-

------  EDI saves on clerical costs by avoiding re-entering of data. It allows timely and error free transaction information be passed from one computer to another.

-----  By improving information management and data exchange between organizations, EDI promotes introduction of new business strategies such as just in time manufacturing based on zero stock principle.

-----  Providing error free information to the right place at the right time; thus quicker response to orders, shortening of delivery cycle.

-----  Reducing stocks levels and thus increasing availability of working capital.

-----  Quicker and safer processing of invoice brings speedy payments with improving cash flow .

-----  EDI speeds up border control and other official interventions such as costumes clearance of goods .

-----  EDI through computer oriented controls, improves the efficiency of controlling authorities.

-----  Improves costumer service.

The main and very useful help from EDI is that it helps the uniform goods flow when goods are passing from border or carried in any other transit nation which is neither origin nor destination for that good. It simplifies all the customs processes and allow transit the goods without any disturbance. It also simplifies the documentary process, banking and payment solutions.

Traffic Flows

 


-----   Having determined the trade volumes , the immediate exercise would be estimate the traffic flows likely to be materialized at the dry port . This volume obviously would be a percentage of the total trade volumes and would be influenced by many factors having a direct or indirect bearing on such traffic .

-----   To begin with such commodities as crude oil , petroleum, oil and lubricants, dry bulk cargoes like minerals and ores, coal, cement, fertilizers and heavy structural including steel etc.  have to be discounted to the appropriate extent .

-----   The general principal to be followed should be to concentrate on containerisable commodities, and general cargo able to containerization .

-----   This fact is supported by ever increasing conversion of breakbulk general goods traffic into containerized transport and this being the future scenario, provisions of container handling facilities should suffice at the dry ports.

-----   After having obtained the volumes of containerisable commodities, these volumes can be converted into number of containers in terms of Twenty Foot Equivalent Units (TEU) with the help of a conversion table.Where volumes instead of weight are available-29 cubic meters may be taken as equavalant of one TEU.

-----   The traffic flows should then be established in terms of TEUs for export and Import both .

Multimodal Transport and Documentary Credit

 


-----   Science transport is an integral part of global trade , the documents issued by the Carrier while taking charge of the goods in a crucial document. The other documents include commercial invoice, packing list, certificate of origin, certificate of inspection etc.

-----   The Transport Document will depend on the mode of transport like sea, air , land and the agency issuing the document . The most commonly used Transport Document is called Bill of Lading with an endorsement "shipped on Board" signifying that the goods have been physically placed on board on the ship. In the case of Air Transport , the document is called Airway Bill issued by airlines or their authorized agents.

-----   Multimodal Transport implies transport by  two or more then two modes under a single document issued by MTO . This document has involved in response to advances in transport technology through containerization and emergence of non-vessel owning operators. Such operators have evolved their own document called CTD (combined transport document). Which is now widely accepted in developed countries.The person issuing the CTD takes responsibility as a principal of the safe conduct of transport of goods over different mode of transport from the place of receipt of goods to the place of delivery .

Sometimes instead of CTD, a through Bill of Lading may be issued by a shipping line covering the entire transport including transhipment at an intermediate port to another vessel . A CTD can be issued by any person acting on as an MTO . Who could be Shipping Lines, Freight Forwarder, Common Carriers, Terminal Operators or purely Commercial Enterprises .

Implied Warranties in Marine Adventure

 


In order to make the underwriter liable under a contract of marine insurance or cargo insurance , there are certain preliminary essential conditions which must be complied with though not expressed in clear ords . These terms are implied warranties basically these are two :-

A)  -----  Implied warranties of seaworthiness :-
             
                It implies that the ship , by which the particular kind of cargo is transported , is fit to carry the particular cargo . For instance , if is frozen meat , then the refrigerating machinery, holds etc. must be in proper order . Actually for a proper cargo all supporting  machinery and others have to be in a good condition and seaworthy , but there are is not implied warranty that the goods are seaworthy .

b)  -----  Marin adventure in all respect to be lawful activity :-

              It implies that an insurance of unenforceable if it is respect to a marine adventure which has declared illegal according to the law of land where the contract was effected . 

              If any policy has been taken for in any of the cargoes forbidden to be exported from India , the insurance companies are at liberty to avoid the contract on the basis of breach of implied warranty of legality through the trading in the countries of Africa for these items may be legal . 

What Constitutes Material Circumstance

 


The term "Circumstance" includes any communication made or information received by the assured . Every circumstance is deemed to be material which would influence the judgment of an insurer in determining the risk of fixing the premium . The assured is under obligation to tell every material fact and the change in circumstance , if any , to the insurer . Further if the assured is asked a question whether a material fact or not , by the underwriter , he must answered it truly otherwise it may vitiate the policy . However , the following circumstances need not be disclosed :-

a)  -----  Any circumstance which diminishes the risk .

b)  -----  Any circumstance as to which information has been waived of by the insurer while taking the risk.

c)  -----  Any circumstance which is known or presumed to be known to the insurer in ordinary course of the business ;
    Matters presumed to be known by underwriter are the matters falling in the category of trade usages such as routes being adopted by the ship , methods of loading , discharge, stowage, packing of cargo and general nature of cargo .
    For instance the chemicals are not to be carried as less than container load cargo (LCL) with goods for human consumptions or edible quality . These need not be communicated .

d)  -----  Matters not affecting the risk .

e)  -----  Excessive valuation of cargo must be communicated to the underwriter but an insurance for an excessive sum under the unvalued policy would not be necessary  to be disclosed because in case of loss of the consignment the assured would be entitled to recover only the true value of goods, i.e. the insurable value.

Customs Convention on Container

This Convention is administered by the Customs Co-operation Councils .

Its purpose is to facilitate the use of containers in international traffic . The contracting parties grant free temporary admission to containers subjected to re-exportation when they are ;

-----   Imported loaded to be re-exported empty or loaded .

-----   Imported empty to be re-exported loaded .

Containers have to be approved in compliance with technical conditions concerning construction and closing systems, including ;

-----   External marking with owner's name and address , tare and identification;

-----   They have to be capable to simple the effective sealing;

-----   It must not be possible to introduce or remove any goods without breaking the seal or leaving trace of tampering .

-----   There must be no space in which goods might be hidden;

-----   They must be readily accessible for Customs inspection; a certificate of approval must be displayed on the outside .

-----   Prescribed structural requirements;

-----   Requirements relating to the closing system .

These are the main points regarding this .

Advantages of TIR to Customs

The advantages for customs authorities of States Contracting Parties to the TIR Convention are considerable.

In particular the following may be mentioned .

-----   The physical inspection of the load and transit country frontiers , expensive in terms of labor and facilities , can be replaced by inspection confined merely to the external condition of the container or the means of transport and the sales  affixed by competent authorities in the country of departure ;

-----   It is no longer necessary to organize a national guaranteeing system since an International guaranteeing system of lawful amount per TIR carnet and per country is provided by the TIR system .

-----   It eliminates the need for an expensive national system of documentary control .

Commercial Advantages :-

The advantages to commerce and to transport interests are equally clear . Goods may travel across national frontiers with a minimum of interference by Customs . By reducing delay in transit , it enables significant economics to be made in transport costs. Moreover the revised provision of the TIR convention enable this advantages to be widely applied to the transport of goods in containers . Finally in reducing the impediments to international traffic by Road Customs Control , it enables exporters to select more easily the form of transport most suitable to their needs .

Outline of TIR Convention

 


To ensure the goods may travel with the minimum of interface en-route and yet offer safeguards to Customs administrations in all transit , the TIR system contains four basic requirements :-

-----   That goods should travel in secure vehicle or containers .

-----   That duties and taxes at risk should throughout the journey be covered by an internationally valid guarantee .

-----   That goods should be accompanied by an internationally accepted carnet taken into use in the country of departure and serving as control document in the countries of dispatch , transit and destination .

-----   That Customs control measures taken in the country of departure should be accepted by the countries of transit and destination .

The TIR convention provides that goods shall be carried in containers or in vehicle whose load compartment is so constructed that there shall be no access to the interior when secured by Customs seal and   that the result of any tempering will be clearly visible . The Convention sets out standards of constructions and approval procedures and goods may only be carried under cover of a TIR carrnet in approved vehicles and containers . Special provisions apply for heavy and bulky goods which can not be carried in normal transport.

Regulation and Control of Multimodal Transport

 


-----   The UNCTAD shall not affect or be incompatible with the application of any international convention or national law relating to the regulation and control of transport operations .

-----   The UNCTAD  shall not affect the right of each state to regulate and control at the national law level multimodal transport operations and multimodal transport operators , including the right to take measure relating to consultations, especially before the introduction of new technologies and services between multimodal transport operators , shippers , shipper's organizations and appropriate national authorities on terms and conditions of service ; licensing of multimodal transport operators ; participation in transport and all other steps in the national economy and commercial interest .

-----   The multimodal transport operator shall comply with the applicable law of the country in which he operates and with tyhe provisions of this convention .

-----   This article is intended particularly to protect the interest of developing countries . The study carried out by the UNCTAD Secretariat had raised several issues which were the particular concern to developing countries and they , therefore felt the need for control and regulation of multimodal transport operations at the national level and a suitable provision in the convention spelling out the areas of such control and regulations .

-----   The developing countries were however , generally oppose to any such provision as they felt that all sovereign state had this inherent right and there was hardly any need for a separate provision in this regard in an international convention . The article  that was finally incorporated in the convention was a compromise between these two opposing views .