Assignment Code: IBO-05/TMA/2022-23

Course Code: IBO-05

Assignment Name: International Marketing Logistics

Year: 2022-2023

Verification Status: Verified by Professor

Attempt all the questions. 20x5

Q1) (a) What are the main activities involved in marketing logistics? Explain them briefly.

Ans) The main activities involved in marketing logistics are as follows:

Order Processing: Processing customer orders is the focal point of the physical distribution activities. The customer orders should be completed as quickly as feasible in order to give better customer service. Receiving, recording, filling, and assembling all such orders for transportation are all included in order processing. When these processes are completed swiftly and precisely, the business and the clients win. Sometimes, the error made at this stage can turn out to be very expensive. For instance, supplying the buyer with the incorrect item or the identical item with different specifications may result in the cancellation of the initial transaction (apart from loss in the credibility of the firm). Similar to this, major consequences may result if the order is not carried out in a reasonable amount of time. It is now possible to handle orders quickly thanks to high speed data processing systems.

Warehousing: The act of sorting and storing goods in order to maximise temporal utility is referred to as warehousing. The main goal of warehousing activities is to organise the placement of goods, provide storage space for them to be kept, consolidate them with other items of a same kind, divide them into smaller quantities, and create a product assortment. In general, the more warehouses a company has, the less time it will take to serve clients at various places, but the expense of storing will be higher. The company must therefore balance the expense of warehousing with the expense of providing excellent customer service.

Inventory Control: Inventory decisions, which are connected to warehousing decisions, are crucial to the success of physical distribution, especially when inventory costs can be as high as 30–40%. (e.g., steel and automobiles). It is therefore understandable why more and more businesses are adopting the novel idea of just-in-time inventory decisions. Estimating the product's demand is necessary for the choice on inventory level. An accurate demand forecast is important for maintaining the right level of inventory and managing tie inventory costs. This benefits the company in terms of the cost of inventory, timely client delivery, and stable production levels.

Transportation: Transportation aims to convey things in the necessary quantities, at the appropriate times, and for an affordable price from points of production and sale to points of consumption. The items handled gain time and location benefits from the transportation system, which raises their economic value. Transportation facilities must be sufficient, regular, dependable, and equitable in terms of the costs and advantages of the facilities and services offered in order to meet these objectives.

Information Monitoring: The physical distribution managers require ongoing access to the most recent data on inventory, shipping, and warehousing. For instance, information regarding the current stock position at each site, future commitment, and replenishment capabilities are constantly needed in relation to inventory. Similar to this, knowledge of the accessibility of various means of transportation, their costs, services, and suitability for a specific product is required before choosing a carrier. Information on space usage, work schedules, unit load performance, etc., is needed with regard to warehousing.

Q1) (b) Enumerate the limitations of conventional ships and discuss how containerisation has helped in overcoming these constraints.

Ans) The limitations of conventional ships are as follows:

1. Break-bulk supplies were loaded onto conventional ships, which led to extended port stays and a quicker turnover in trade between the two nations.

2. The shipper paid a larger amount of bank interest as a result of the delayed shipment.

3. It became extremely challenging for the conventional ships to stay on schedule since the loading of break bulk cargo on conventional ships required special attention. The unpredictable schedule caused an imbalance in the inventory and hindered the buyer from keeping his promise to his retailers.

4. In the past, loading included numerous handling operations that frequently resulted in equipment damage from carelessness or incorrect use.

5. Compatibility-related damages were also common, and despite best efforts and careful preparation, there were certain occasions where two incompatible commodities were co-loaded.

6. The insurance premium increased as a result of the underwriters' decision to cover all eventualities while taking into account the limitations of loading on conventional ships.

7. The break-bulk stowage frequently led to theft.

The idea of containerization, which completely altered the traditional method of ocean transport in developed countries and gained equal popularity in developing countries, was found to be the solution to the aforementioned problems as well as to reduce costs to the shipowner and improve ship turnaround.

To make container handling and multi-modal transit easier across all nations, the container's dimensions have been standardised. The goal of standardised dimensions is to realise the door-to-door delivery idea at the heart of containerization.

When the goods is palletized, the container is filled mechanically with a forklift, and when it is not, it is manually filled at the shipper's warehouse. After being filled to capacity, it is loaded onto a trailer chassis or rail car and transported to the loading berth where it is lifted by specialised container handling machinery or a crane and ultimately placed in the ship's slot designed for this function. The same procedure is performed at the port of discharge, and the container is then brought to the importer's warehouse for de-stuffing. The container may only be opened during transportation to allow for customs inspection.

For shippers and shipowners, containerization has a number of benefits that can be summed up as follows:

To Shippers

1. Saving in handling cost

2. Door-to-door delivery system

3. Saving in port charges

4. Reliable and quick delivery

5. Reduced warehousing/inventory cost

6. Reduced acceptability to damage, loss and pilferage

7. Reduced packing cost

8. Reduced insurance cost

9. Reduced documentation

10. Leverage towards better marketing

To Shipowners

1. Reduction in cost

2. Full control of cargo

3. Improved turnaround time

4. Increased carrying capacity

Q2) (a) Describe the importance of national shipping as provider of logistics support to the foreign trade of a country.

Ans) Logistical assistance for the nation's export sector is largely provided by shipping. In addition to allowing the movement of products in international trade and so promoting economic growth, shipping is significant for a nation for the reasons listed below:

1. Strategic Reasons: The economy is significantly reliant on imports of crude and POL in order to maintain an uninterrupted supply of these crucial supplies, as in the case of India.

2. Contribution to Balance of Payments: The balance of payments is sometimes significantly impacted by national shipping. Through freight revenues and on account of payments made in local currency to local shipping companies that would otherwise have been made in foreign currency, it helps to earn or save foreign money.

3. Second Line of Defence: National shipping is commonly referred to as the merchant navy because of its function as a second line of defence and a strong logistical support to a country's naval forces during a war.

4. As Sideguard to Country's Overseas Trade: When a nation builds up a sizable merchant fleet in line with its trading requirements, it not only ensures the sufficiency of shipping services but also serves as a crucial barrier against unfair freighting practises and policies by independent carriers or shipping associations operating in the nation's international trade.

5. Reduction in Dependence on Foreign Ships: The very existence of domestic shipping serves as a check on the unethical behaviour of foreign ship operators.

6. Development of Ports and related Auxiliary Services: Ports and other ancillary activities such as ship repair/dry docking, container repair and leasing, etc., which are typically referred to as auxiliary services and aid in employment generation as well as foreign exchange earnings by providing service to a greater number of ships, develop as a result of the growth of shipping.

Q2) (b) What are the major aspects of strategic logistics planning? Explain these aspects and enumerate the factors that influence logistics planning

Ans) Manufacturing and physical distribution are both included in strategic logistics planning. You are aware that the manufacturing process entails a number of choices, such as the degree of vertical integration, the quantity, size, and location of the manufacturing facilities, the process technology to be used, the kind of production plan to be used, the products that will be produced and those that will be purchased, and so forth. On the other hand, physical distribution planning entails a separate set of choices, such as where to locate warehouses, how much inventory has to be kept on hand, the best mode of transportation, how to choose a carrier, planning and control issues, organisational concerns, and so on.

The major aspects of strategic logistics planning includes:

1. Leveraging Logistics: Companies frequently look for ways to use logistics while doing strategic logistics planning. A business that uses logistics should consider how it can genuinely differentiate itself through its physical distribution capability rather than concentrating on methods to make the current system more effective.

2. Evaluating Impact: Evaluating the effects of potential business plans is the second component of strategic logistics planning. This entails the executives in charge of physical distribution taking part in the company strategy planning process. Managers of physical distribution should participate in both the development and evaluation of the business strategic plans.

3. Supporting the Corporate Strategic Plan: Supporting the business strategic plan is the final component of strategic logistics planning. This part of strategic logistics planning entails creating a strategy for the logistics area that supports the corporate plan and enables the functional area to operate as efficiently as feasible after a corporate plan has been articulated and approved.

Factors Influencing Logistics Planning

The need for better customer service is one of the key variables impacting logistics planning. Product quality is a more crucial component of competition in many industries and for many businesses. Good customer service is a crucial component of product quality. In fact, a lot of customers are clamouring for greater support. They care about a variety of aspects of customer service and use more complex methods of measurement. A proliferation of new items, shorter product life cycles, and more sophisticated distribution patterns have all occurred concurrently in many businesses. These factors add to the complexity of a company's customer service operations.

Physical distribution, which most businesses also incur considerable costs for, can have a big impact on a company's overall performance and return on investment. Additionally, since the costs associated with inventory, warehousing, and transportation are shifting, businesses must modify their logistical system. The need to boost financial performance, the proliferation of new products, shorter product life cycles, more sophisticated logistics networks and delivery systems, and a change in the size and importance of players in the distribution channels are other factors that affect logistics.

Costs and logistics variables interact in a complicated and indirect manner. A reduction in one cost can have an impact on a number of other logistics costs. Therefore, a comprehensive examination of this complete set of complicated relationships is required. Organizational conflicts are another issue that complicates logistics planning. Across the organisation, several logistics-related tasks are assigned responsibility. Different organisational roles have diverse interests, and as a result, a logistic system must balance competing aims and demands.

Q3) Briefly comment on the following: (4x5)

a) “Distribution, marketing and manufacturing cannot be viewed as separate activities within the business, particularly at the strategic level”.

Ans) Because customer service is the result of the logistics system, it serves as the tether connecting the marketing and logistics processes. The art of coordinating the complementary functions of marketing and logistics rests in maximising the value added through customer service while actively pursuing a cost advantage.

In order to facilitate the exchange of goods and services between buyer and seller, customer service must offer time and location services. A product or service has no value unless the user or consumer actually uses it. Therefore, the distribution function of the firm is essentially concerned with making the good or service available. However, availability is a complex notion in and of itself that is impacted by a myriad of variables. The interaction of all those elements that influence how goods and services are made available to customers ultimately determines customer service.

b) "The world economic situation and the world trade are very closely related".

Ans) Both the health of the global economy and the state of international trade are directly impacted by any shifts, whether positive or bad, that take place in the former. This is because of the close linkages that exist between the two. As a direct consequence of this, it is extremely probable that the altering economic patterns will also have an effect on the flow of commercial activity. As a direct consequence of this, there are periodic shifts both in the supply of goods and the demand for those goods in international trade. Due to the fact that ships transport a sizeable proportion of the goods traffic in international trade, the fluctuations will have an effect on the flow of seaborne trade.

c) “The most critical component in warehousing is People”.

Ans) While some equipment is specifically made to reduce space, other equipment is utilised to treat perishable goods for preservation, such as sprayers and fumigation coverings. The majority of warehousing equipment has a far shorter useful life than the warehouse building. While warehouse equipment loses value over time, the warehouse structure could increase in value. People are the most important part of warehousing. The performance of individual warehouse employees frequently distinguishes between high- and low-quality warehousing. In contrast, there are often few differences in the building and equipment quality. Thus, the performance and overall cost of the warehousing facility can be impacted by the wise use of the three components, namely, space, equipment, and personnel.

d) “Indian shipping policy measures are aimed at the development of shipping fleet so as to attain self-reliance”.

Ans) To aid in reviving India's shipping sector, the Indian government has taken a number of steps, and other reforms are likely to be announced soon to help hasten the change. Ports and maritime trade play a significant role in India's goods trade. According to the Shipping Ministry, the shipping sector in India accounts for around 95% of the country's overall volume of merchandise commerce and 70% of its total value.

However, the shipping industry has been unable to modernise and fulfil expanding needs due to cumbersome procedures, a lack of connectivity, and delayed paperwork. Comparatively, the GDP share of goods trade in India is only 42%, while it is 75% in Germany and 70% in the EU. Additionally, the government has urged the Reserve Bank of India to compare shipyard restructurings that have already occurred. According to the Shipping Ministry, this will stop loans from becoming non-performing assets under challenging market conditions.

Q4) Write short notes on following: (4×5)

a) Commercial Shipping

Ans) Commercial shipping refers to the process of shipping goods business to business, often involving large volume shipments. Regular shipping often refers to residential shipping and typically involves small and individual shipments to residential addresses. Shipping is an international activity perpetually exposed to change-in the international environment. The highly capital-intensive nature of the industry necessitates large financial resources, and adequate utilisation of capacity. The commitments of liner shipping service require an adequate and captive cargo base for ensuring its continuation on a stable and viable basis for effective support to the trade. Traditionally, trade follows the established flags. But diversification of trade necessitates promotional shipping services under the protective umbrella of the State. The efficiency of shipping services and their cost depend mainly on the available port facilities

b) Tramp Trade

Ans) Tramp trade deals with the bulk carriers which carry cargoes of homogeneous variety in large quantities from either one port to another or between a few ports. When a tramp is engaged for the carriage of cargo it is said to be under charter, as either the whole or the bulk of its space is hired by one charterer. Unlike the liner trade, tramp trade does not have any fixed ports of loading and discharge. There is no periodicity of shipments and tramps are engaged on terms and conditions including freight rate/hire charges, mutually agreed between the shipowners and the charterers. Tramp owners are always looking for ports where profitable cargo is likely to he found while charterers are looking for tramps which are available for hiring at competitive rates. Thus, tramp engagement is accomplished without any given set of conditions and rules.

c) Privatization of Ports

Ans) In recent years a significant number of countries have implemented policies aimed at reforming their port industry. In the belief that it will improve efficiency and reduce the heavy financial burden placed upon governments that attempt to support such a capital-intensive industry, privatization has often formed an important strand of such policies. A key claim in favour of privatization is that the transfer of ownership from public to private hands will ultimately lead to an improvement in economic efficiency and, hence, financial, and operational performance. This paper investigates the theoretical underpinnings and practical validity of this claim and concludes that privatization is only a partial cure for what ails the world's ports and that, if implemented in isolation, it simply cannot deliver the much-needed panacea for the industry's woes.

d) Deck Cargo Rates

Ans) Dangerous commodities like acids, explosives, timber etc. are invariably carried on the deck of the ship. As such, these are placed in the category of deck cargo and are charged special rates. For bulky and large cargoes too big for containerization, this may be necessary. In all cases, the cargo is thoroughly inspected when it is placed and the load is carefully balanced for safety. Papers documenting the type of cargo and its history must also be carried, including lading papers detailing where the cargo originated and where it is going. Insurers typically treat deck cargo differently than other types of cargo. There is an increased risk of loss with such cargo and insurers may limit situations where they will pay claims or require people to buy separate cargo insurance for this type of cargo. This is done to reduce liability for the insurer.

Q5) Distinguish between the following: (4x5)

a) Air Transport and Multi-Modal Transport

Ans) Using a variety of aircraft, including passenger, cargo, and helicopters, air transportation moves people and freight over the airways. Although this is the fastest form of transportation, door-to-door service is not offered. Passenger and freight aeroplanes, or aircraft designed for carrying passengers, freight, or mail, are included in air transportation, which is the sector of transportation that uses the second-highest amount of energy. A single contract for the delivery of products using at least two different means of transportation is known as multimodal transport. The carrier is still responsible for the entire carriage even though it uses many different forms of transportation. The movement of people and commodities using many modes of transportation, such as cars, public transportation, trucks hauling freight, bicycles, and walkers, including those with impairments, is referred to as multimodal transportation.

b) Shipowners' Lien and Maritime Lien

Ans) When it comes to the transportation of commodities by water, there are two sorts of rights accessible. This privilege belongs to shipowners, and maritime liens are applicable against the ship, the cargo, and the freight. The right of a shipowner to keep possession of the cargo he has transported until all freight and other costs owed to him under the terms of the contract of carriage is known as a shipowner's lien. A possessory lien exists.

A maritime lien is a claim made against a ship, its cargo, and its freight for services provided to those parties. All those who have contributed in some way to saving the ship or its cargo during a dangerous situation are legally entitled to this entitlement. The parties can get their money back from the shipowner or cargo owner by using this right. The ship is not permitted to leave the port or ship until their charges are paid, or the court may order the cargo to be sold. This right of lien is available to the ship's crew for their wages, the bottomry bond holder for their fees, anyone who saves a ship or piece of property from charges related to salvage, and anybody who has a claim against the ship for negligence-related collision-related damages.

c) Open Rates and Ad-Valorem Rates

Ans) These rates only apply to specific commodities and are not in line with published or settled rates. These prices are often competitive. When competing with ships from a conference, an ocean carrier will offer these low prices. Since all carriers would suffer greatly from this kind of competition, open rates are rarely quoted. Ad valorem taxes are determined as a proportion of the property's assessed value. The annual calculation of fair market value, or the price that a prospective buyer would offer, and a prospective seller would accept for a property, is often referred to as the assessed value of the property.

d) Commercial Crime Services and Commercial Crime Bureau

Ans) All facets of commercial crime are covered by its three specialised bureaux and its cybercrime unit. It offers frequent guidance on criminal tactics and how to avoid them. It offers personal fraud consulting services, such as background checks, document verification, investigations, and training in crime prevention. Established in 1992, the Commercial Crime Bureau serves primarily banks and other financial service companies. It informs the financial community whenever a new scheme is developed by criminal genius to catch the organisations and people engaging in fraudulent marine practises and keeps the members informed about the intricacy of frauds as they get more sophisticated.