Introduction into Logistics Ph D Natasha Lutovinova Logistics

Introduction into Logistics Ph. D Natasha Lutovinova Logistics Lecturer E-mail: Lutovinova. N@nhtv. nl Room: G 1. 006

Handbook: Paul R. Murphy & Donald F. Wood, Contemporary logistics (New Jersey 2011), 10 th edition 3

Introduction into Logistics Course Outline 12. 05 Introduction 13. 05 SCM Concept, Inventory 14. 05 Demand Management, Warehousing Management 15. 05 Transportation Management, International Logistics 16. 05 Poster Session

Learning Objectives To identify the reasons for governmental intervention in the area of international trade To examine international documentation as well as terms of sale and payment To examine transportation and inventory considerations in international distribution 5 - 7

Macroenvironmental Influence on the International Logistics 1. Political factors: Changes to political landscape affect logistics The end of Soviet rule in Eastern Europe EU economic integration/Customs Alliance RBK NAFTA North American Free Trade Agreement (USA, Canada, Mexico, 01. 1994) Tariff barriers Nontariff barriers- temporary limits for export-import of some goods: 1. Measures of direct limitations (licensing, quota) 2. Special protection measures (import quota, special duties) 3. Administrative and customs formalities (boarder tax, documents fee, anti-dumping measures) Restrictions on truck traffic, forcing freight onto rail and water Embargoes 6 - 7

Macroenvironmental Influence on the International Logistics Changes to political landscape affect logistics Customs Alliance RKB Free Trade Zone: Russia, Belorussia, Ukraine, Kazakhstan, Kirgizia, Armenia, Moldavia, Tadzhikistan: 18. 10. 2011 Customs Alliance vs Free trade Zone 7 - 7

Macroenvironmental Influence on the International Logistics Changes to political landscape affect logistics Sea-port Klaipeda (Lithuania) Klaipėdos. Smelt terminal and RO-RO Klasko, “Mercury” container train Draugystė station of departure -Moscow. Silikatnaya (Russia), Ekodor container terminal 114 TEU, weekly on Friday, 48 hours, signed: 02. 04. 2012, AAAIntermodal Ltd. , Lithuania Sea-port Rotterdam (The Netherlands)Smolensk (Russia) 8 - 7

Macroenvironmental Influence on the International Logistics Changes to political landscape affect logistics Container Trains: - “Mercury” (Klaipeda (Lithuania) – Moscow (Russia) - “Viking” (Odessa/Ilichevsk (Ukraine)-Minsk (Belorussia)-Klaipeda (Lithuania) - «ZUBR» (Tallinn (Estonia) — Riga (Latvia) — Minsk (Belorussia) — Odessa/Ilichevsk (Ukraine) - “Mongolsky vector” (Mongolian vector) (Brest (Belorussia) — Iletzk (Russian-Kazakh border) — Ulan-Bator (Mongolia) 9 - 7

Macroenvironmental Influence on the International Logistics Government Influences on Foreign Trade Government’s Role in International Transport Cargo preference Government support their own carrier International carriage is an export to the nation operating the carrier - affects balance of payments International fleets, railroads and airlines may be subsidized Balance of payments – system of accounts that records country’s international financial transactions 10 - 7

Macroenvironmental Influence on the International Logistics 2. Economic Factors: Currency fluctuation Market size Income Economic integration Logistics Infrastructure 11 - 7

Macroenvironmental Influence on the International Logistics 3. Cultural factors: - Language - National holidays - Time orientation - Values - Religion 12 - 7

Figure 12 -1: Some of the symbols used for packing export shipments 13 - 7

Figure 12 -2: A Package Marked for Export 14 - 7

The export procedure 1 Exporter Importer 4 2 Bank in exporter’s country 5 15 - 7 Customs Secure transport and documentation Source: Albaum et al. , 1994, p. 419. 3 Import warehouse 8 Manufacturing 6 Importer’s bank 7 Ship 9

Documentation Certificate of origin Commercial invoice Packing list Bill of Lading, Air waybill, Rail waybill, CMR Shipper’s export declaration (SED) Shipper’s letter of instruction (SLI) Correction telegram 16 - 7

Terms of Sale and Payment Terms of sale: Determining when and where to transfer between buyer and seller: The physical goods Payment for the goods, freight, insurance Legal title Required documents Responsibility and risk Incoterms 2010: by International Chamber of Commerce in 2010, in force: 01. 2011 17 - 7

Terms of Sale — Incoterms 2010 Sea & Inland Waterway: FAS (Free Alongside Ship) FOB (Free on Board) CFR (Cost and Freight) CIF (Cost, Insurance, and Freight) Any mode(s) of transport: Ex. W (Ex Works) FCA (Free Carrier) CPT (Carriage Paid To) CIP (Carriage & Insurance Paid to) DAT (Delivered at Terminal) DAP (Delivered at Place) DDP (Delivered Duty Paid) http: //www. kalgin. com. au/incoterms. html 18 - 7

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Methods of Payment - Cash in advance - Letter of credit - Bills of exchange - Open account Documents involved in L/C requirements: - Commercial invoice - Packing list (2 copies) - Certificate of origin ( 2 copies) - Bill of lading (original) Influences the selling price 21 - 7

Letter of Credit: - irrevocable - sight - time - date Documents: - Commercial invoice - Bill of lading (original) - Insurance 22 - 7

Most common export documents Commercial Transportation • Commercial invoice • Bill of lading (Smart. BOL Classic bill of • Packing List lading software) Government • Dock receipt • Export declaration • Insurance certificate • Consular invoice Banking • Certificate of origin • Letter of credit • Quality Certificate • Phytosanitary (Fumigation)Certificate

Most common export documents Government • Phytosanitary (Fumigation)Certificate International Standards For Phytosanitary Measures No. 15 (ISPM 15) IPPC – International Plant Protection Convention

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International Trade and Supply Chain Specialists International Freight Forwarders Advising on acceptance of letters of credit Booking space on carriers Preparing an export declaration Preparing an air waybill or bill of lading Obtaining consular documents Arranging for insurance Preparing and sending shipping notices and documents Serving as general consultants on exportimports matters 26 - 7

International Trade and Supply Chain Specialists International Freight Forwarders Nonvessel-Operating Common Carriers (NVOCC), difference: 1. Can issue their own Bills of lading 2. Can set their own rates for ocean and intermodal shipments 3. Can enter into service contracts with ocean carriers 27 - 7

A Forwarder’s Export Quotation Sheet Showing Factors to Include When Determining a Price Quote

International Trade and Supply Chain Specialists Customs Brokers Export Management Companies (export sales department) Export packers 29 - 7

International Trade and Supply Chain Specialists - 30 - 7 Transportation Considerations in International Distribution: Ocean shipping Shipping Conferences and alliances International airfreight Surface transport considerations

International Trade and Supply Chain Specialists Ocean Shipping conferences (Before 90’s ) Ocean carrier alliances The grand alliance(OOCL, HL, MISC, NYK, MSC) The New World Alliance(APL, HYUNDAI, Mitsui O. S. K. lines (MOL)) CYKH Alliance - (China Ocean shipping company (COSCO), K-LINE, YANG MING, HANJIN) Benefits: Sharing space Broader service network 31 - 7

World Seaborne trade 1969 -2010 Foto Google door student 32 - 7

International Seaborne Trade and Exports of Goods, 19552005 33 - 7

International Trade and Supply Chain Specialists Ocean Shipping Load centers 34 - 7

Top-10 Shipping lines, October 2011 Rank Operator Total TEU Owned Ships TEU Chatered Ships TEU Ships % Chart 2, 477, 244 650 1, 169, 985 216 1, 307, 259 434 52. 8% 2 APM-Maersk MSC (Mediterranean Shipping Company) 2, 035, 863 473 985, 687 206 1, 050, 176 267 51. 6% 3 CMA CGM Group 1, 348, 292 403 506, 14 94 842, 152 309 62. 5% 4 COSCO Container Lines 642, 467 146 348, 427 96 294, 04 50 45. 8% 5 Hapag-Lloyd 621, 889 143 283, 786 61 338, 103 82 54. 4% 6 Evergreen Line 609, 178 167 330, 167 88 279, 011 79 45. 8% 7 APL 590, 972 144 169, 547 45 421, 425 99 71. 3% 8 CSCL 509, 2 145 315, 864 76 193, 336 69 38. 0% 9 Hanjin Shipping 489, 381 103 220, 895 37 268, 486 66 54. 9% 435, 565 103 215, 352 36 220, 213 67 50. 6% 1 10 MOL 35 - 7 Source: www. alphaliner. com

Maritime Routes and Strategic Locations Copyright © 1998 -2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to use. 36 - 7

Capacity of Key Strategic Passages Panama Suez Malacca Minimum depth 12 meters (40 feet) 16 meters (58 feet) 21 meters (68 feet) Length 64 km 190 km 800 km Standard Panamax Suez-max Malacca-max Capacity 65, 000 dwt 210, 000 dwt 300, 000 dwt TEU 4, 800 12, 000 18, 000 Transit time 16. 5 hours 10 to 12 hours 20 hours Copyright © 1998 -2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain 37 - 7 and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to

Pirates http: //www. iccccs. org/index. php? option=com_fabrik&view=visualization&controller=visuali zation. googlemap&Itemid=219 2010: $ 210 mln. Payouts To Somali pirates 38 - 7

The Northern East-West Freight Corridor Copyright © 1998 -2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY. This material (including graphics) is not public domain 39 - 7 and cannot be published, in whole or in part, in ANY form (printed or electronic) and on any media without consent. This includes conference presentations. Permission MUST be requested prior to

International Trade and Supply Chain Specialists Surface Transport in Other Countries - Country’s infrastructure - Sources of delay - Service performance Alternative: Short sea shipping (SSS) 40 - 7

International Trade and Supply Chain Specialists International Airfreight International Air Transport Association (IATA) Chartered aircraft Integrated air carrier (UPS, Fed. Ex, DHL) Scheduled air carrier Bilateral agreements Open skies agreements 41 - 7

Scheduled international freight tonnekilometres flown 2010 1 2008 2007 2006 (millions) Rank 2009 (millions) Airline Cathay Pacific 9, 587 7, 722 8, 245 8, 225 6, 914 Korean Air Cargo 9, 487 8, 225 8, 822 9, 498 8, 680 Emirates Sky. Cargo 7, 913 6, 369 6, 013 5, 497 5, 027 4 Lufthansa Cargo 7, 422 6, 660 8, 194 8, 336 8, 077 5 7, 421 5, 808 6, 582 6, 47 6, 136 6 Fed. Ex Express Singapore Airlines Cargo 7, 001 6, 455 7, 486 7, 945 7, 991 7 China Airlines 6, 410 4, 903 5, 261 6, 301 6, 099 8 UPS Airlines 5, 215 4, 495 5, 289 5, 077 9 Eva Air 5, 166 - - 10 Cargolux 4, 901 4, 652 5, 334 5, 482 5, 237 2 3 42 - 7

Largest Airline Companies by Revenue, 2010 (in $ millions) Group Lufthansa Group Revenue ($B) operating result ($B) net result ($B) 36. 1 1. 76 1. 49 United Continental Holdings 34. 0 1. 82 0. 85 Delta Air Lines 31. 8 2. 22 0. 59 Air France-KLM Group 31. 3 0. 16 0. 81 Fed. Ex Express 24. 6 1. 23 AMR Corporation 22. 2 0. 31 -0. 41 International Airlines Group 19. 5 (British Airways/Iberia) 0. 30 0. 13 Japan Airlines Corporation 16. 0 2. 22 All Nippon Airways Group 0. 80 0. 27 16. 0 The Emirates Group 14. 8 1. 46 source : Airline Business August 2011, Flightglobal Data Research 43 - 7

International Trade Inventories Uncertainty- high safety stock Return items are impossible to accommodate Inventory valuation – exchange rate changes Warehousing facility and management 44 - 7

Logistics Performance Index 2007, updated 2010: Efficiency of the clearance process by border control agencies including customs Quality of trade- and transport-related infrastructures Ease of arranging competitively priced shipments Competence and quality of logistics services Ability to track and trace a shipment Timeliness of shipments in reaching the destination within the scheduled or expected delivery time (ETA) 45 - 7

. LPI Rank Country LPI Customs Infrastructur International Logistics e shipments competence Logistics Performance Index Tracking & tracing Timeliness 1 Germany 4. 11 4. 00 4. 34 3. 66 4. 14 4. 18 4. 48 2 Singapore 4. 09 4. 02 4. 22 3. 86 4. 12 4. 15 4. 23 3 Sweden 4. 08 3. 88 4. 03 3. 83 4. 22 4. 32 4 Netherlands 4. 07 3. 98 4. 25 3. 61 4. 15 4. 12 4. 41 5 Luxembourg 3. 98 4. 04 4. 06 3. 67 3. 92 4. 58 6 Switzerland 3. 97 3. 73 4. 17 3. 32 4. 27 4. 20 7 Japan 3. 97 3. 79 4. 19 3. 55 4. 00 4. 13 4. 26 8 United Kingdom 3. 95 3. 74 3. 95 3. 66 3. 92 4. 13 4. 37 9 Belgium 3. 94 3. 83 4. 01 3. 31 4. 13 4. 22 4. 29 10 Norway 3. 93 3. 86 4. 22 3. 35 3. 85 4. 10 4. 35 1 = lowest possible score, 5 = highest possible score 46 - 7