OMGT2222 Transportation and Freight Logistics Assessment Answer

Executive Summary

This transportation explains the best possible routes from Singapore to Hong Kong, Shenzhen, Ningbo, and Shanghai. For each route, costs for shipping goods were identified using the incoterms CIF, CFR, and DDP. For all three incoterm, the outcome was the same that was PSA port of Singapore to Victoria Harbour for Hong Kong was the best route. This was because the cost for other routes in the same incoterm were higher in comparison with a large amount.

Organisation Identity

Curio Souvenir Pvt. Ltd. (CSPL) was established in 2013 and manufacturing a wide range of souvenir products like porcelain plates, merlion miniatures, fragrant florals, and other stationery items. The location of the manufacturing unit is 1268, depot road with a workforce of 250 employees. These are the owner, managers, warehouse coordinators, engineers, and artisans. CSPL is exporting these souvenirs to many countries like Canada, India, England, and more. It is the company’s target is to export its products to China like Hong Kong, Shanghai, Shenzhen, and Ningbo. The souvenir industry in Singapore and China is quite successful unlike other countries. CSPL is shipping its products under the name of the company to various buyers (Hodges 2022). The main customer base of the souvenir industry and CSPL are the tourists. The tourist footfall from December, 2022 to July, 2023 in Indonesia was 8,631,946 boosting the souvenir market after the pandemic (singstat 2023). CSPL ships their products from their warehouses; Swiss World Cargo (SWC) handles the road transportation of the goods to Singapore port and exporting countries ports to the buyer. The sea transportation is done by Shipa freight in Less than Container Loads (LCL). The companies use these containers because the size of the products manufactured by them are not sufficient for a Full Container Load (FCL) (Ma and Tan 2019). For the raw materials, CSPL has 20 different suppliers in order to have the good supply chain between the raw material and manufacturing of the products. These products are quite delicate, which is the reason behind their over packaging for overseas shipments. The products requires both the inner and outer packaging for the safety measures. The inner packaging is done with the quadrupled layer of the bubble wraps and the outer packaging is done with the triple wall board. CSPL’s client in China is Overseas Souvenir Ltd. (海外纪念品). The client is imports souvenir from different parts of the world and generated a revenue of around $ 3.9 million in the year 2022. Overseas Souvenir have their branches in Hong Kong, Shenzhen, Shanghai, and Ningbo.

International Trade

Contract of Sale

Seller Address: Buyer Address:

Curio Souvenir Pvt. Ltd. Overseas Souvenir Ltd.

1268, Depot Road, G/L, The K.S. Lo G

Singapore 109682 Hong Kong 9990777

1. Sales of Goods

The following products will be sold, transferred, and delivered by the seller to the buyer,

1. Quotation

The loading port for delivery of the products will be PSA and the destination port will be Victoria Harbour for Hong Kong supply. The export of products for the location Shenzhen, Ningbo, and Shanghai will be from Jurong Port. The destination port for Shenzhen is Nanshan Port, for Shanghai is port of Shanghai, and Ningbo will be port of Ningbo-Zhoushan. The shipping delivery time of the cargo is expected to be 11-14 days.

Figure 1 Estimated Quotation

Source 1 (Santander 2021; Yusen Logistics 2021; Kuehne+Nagel 2021)

C Diagrams of the routes

From Singapore to Hong Kong

From Singapore to Shanghai

From Singapore to Ningbo

From Singapore to Shenzhen

Cost, Insurance and Freight CIF

The expenses reflected in the CIF for the CSPL consist of the upkeep of products, inland transportation, agent's payments for managing the supply chain section, terminal charges, transferring fees, custom releasing costs, insurance fees, ocean shipping charges, compensation and more. Once the products get to the intended port, the Overseas Souvenir takes over all duties, therefore this is when the purchaser is responsible for paying. The cost of getting the shipment to a location that is owned by the buyer, as well as import duty and levies. Additionally, if the purchaser asks CSPL to help with import paperwork or legal action, the purchaser must pay back what was paid to the vendor.

Cost and Freight (CFR)

CSPL's roles and responsibilities

The following cost charges will be by CSPL:

• For keeping items in the storage facility, and costs for upkeep
• For the loading and shipping of goods to the specified port, there are inland fees.
• Depot fees, terminal processing fees, and customs fees
• Costs associated with creating all required paperwork
• Customs fees for exports, for conducting customs investigations
• Fees for shipping products throughout the transport process to the specified port, including freight

Roles and responsibilities for foreign souvenirs

Costs that are paid for by the purchaser include:

• Insurance costs because the client bears the entire burden of covering and the hazards associated with the products.
• Customs procedures for imports, which include paying all applicable fees and charges at the specified port
• The cost of inland conveyance to get from the chosen seaport to the final location

Delivery Duty Paid DDP

The DDP transportation process is funded by the seller. CSPL is responsible for conveying the products from the point of source to the point of delivery (SURARAKSA et al. 2020). The vendor handles all legal processes in accordance with the DDP shipment rules. Once more, the CSPL is responsible for the expense, risk, and obligation of the items until they arrive at the designated location.

International Transportation Plan

An international transportation plan outlining the products' transportation path from the CSPL warehouse to the Overseas Souvenir warehouse will be offered below utilizing the incoterms CIF, CFR, and DPP. Since there is no train that connects the two storage facilities, water transport has been selected for the primary international transportation of large and oversized cargo because it is less expensive than air transportation.

CIF at PSA port, Singapore to HKP, China

The merchandise will be transported by truck starting at the CSPL storage in Jalan Buroh to the PSA terminal, where it will be loaded on a vessel chosen by Overseas Souvenir. The cost for covering a distance of 4 miles that is the distance from CSPL warehouse to PSA port will be $10, the shipping cost and other costs sums up to $4,000 from PSA port to HKP. Finally, the motor carrier costs from Kwai Chung via rout 3 is 7.4 miles will be $74. Therefore, the overall cost for this route is $4,084

CIF at PSA port, Singapore to Victoria Harbour, China

The merchandise will be transported by truck starting at the CSPL storage in Jalan Buroh to the PSA terminal, where it will be loaded on a vessel chosen by Overseas Souvenir. The cost for covering a distance of 4 miles that is the distance from CSPL warehouse to PSA port will be $10, the shipping cost and other costs sums up to $4,000 from PSA port to Victoria Harbour. Finally, the motor carrier costs from Victoria Harbour to Kwai Chung via rou te 3 is 7.4 miles will be $74. Therefore, the overall cost for this route is $4,084.

CIF at Jurong port, Singapore to port of Shanghai, China

The goods will be delivered by truck from the CSPL storage facility in Jalan Buroh to the Jurong port, where they will be loaded onto a ship of Overseas Souvenir's choosing. It will cost $25 to travel the 5.03 miles from the CSPL warehouse to Jurong port; the shipping fee and other expenses from Jurong port to the port of Shanghai total $4,200. Last but not least, the 62-mile trip by motor carrier will cost $620 from the port of Shanghai to yuehai road, pudong. Consequently, the total price for this route is $4,825.

CFR at PSA port, Singapore to Victoria Harbour, China

The merchandise will be transported by truck starting at the CSPL storage in Jalan Buroh to the PSA terminal, where it will be loaded on a vessel chosen by Overseas Souvenir. The cost for covering a distance of 4 miles that is the distance from CSPL warehouse to PSA port will be $10, the shipping cost and other costs sums up to $2,500 from PSA port to Victoria Harbour. Finally, the motor carrier costs from Victoria Harbour to Kwai Chung via Kowloon Highway is 7.64 miles will be $76.2. Therefore, the overall cost for this route is $2517.64.

CFR at Jurong port, Singapore to port of Ningbo-Zhoushan, China

The goods will be delivered by truck from the CSPL storage facility in Jalan Buroh to the Jurong port, where they will be loaded onto a ship of Overseas Souvenir's choosing. It will cost $25 to travel the 5.03 miles from the CSPL warehouse to Jurong port; the shipping fee and other expenses from Jurong port to the port of Ningbo-Zhoushan totals $2,800. Finally yet importantly, the 538.2-mile trip by motor carrier will cost $5,382 from the port of Ningbo-Zhoushan to Dingtai Road, Fuming Street Yinzhou District, Ningbo, China. Consequently, the total price for this route is $8.207.

DDP at PSA port, Singapore to Victoria Harbour, China

The goods will be delivered by truck from the CSPL storage facility in Jalan Buroh to the PSA terminal where they will be put onto a vessel of CSPL’s choosing. The 4 miles it takes to get from CSPL warehouse to PSA port will cost $10 to travel, and the $6,000 in shipping and other expenses it takes to get from PSA port to Victoria Harbour. Last but not least, the 7.64-mile motor carrier trip from Victoria Harbour to Kwai Chung via route 5 will cost $76.2. Consequently, the total price for this route is $6,086.2.

DDP at Jurong port, Singapore to port of Shenzhen, China

The goods will be delivered by truck from the CSPL storage facility in Jalan Buroh to the Jurong Port where they will be put onto a vessel of CSPL’s choosing. The 5.03 miles it takes to get from CSPL warehouse to Jurong port port will cost $25 to travel, and the $6,700 in shipping and other expenses it takes to get from Jurong port to Shenzhen. Last but not least, the 11.24-mile motor carrier trip from port of Shenzhen to Nanshan warehouse will cost $112.4. Consequently, the total price for this route is $6,837.4.

Recommended Routes

Comparative Analysis

The overall costs for each route have been calculated in the last section. Time consumed for each trip is between 11-14 days. The safety and security of insurance is available in CFR and CIF because in CIF the insurance is done from the side of the seller, whereas CFR it is done from the side of the buyer. The safety and security option is not available in DDP, however, buyer do not have to pay for anything in this incoterm. From the cost analysis in the last section, it is recommended that for DDP incoterm, the PSA port to Victoria Harbour is the best route. For CFR, the best route is PSA port to Victoria Harbour and for CIF incoterm, the same route is best. The only difference in these three routes are the road transits from Victoria Harbour to Overseas Souvenir warehouse.

References

Ghangurde A. (2021). CFR Incoterms (Cost and Freight) - Duties, Obligations & Meaning, CFR incoterms (cost and freight) - duties, obligations & meaning, Accessed: 04 October 2023. <https://www.dripcapital.com/en-in/resources/blog/cfr-incoterms-cost-and-freight>

Ma, N.L. and Tan, K.W. (2019). ‘Reducing carbon emission through container shipment consolidation and optimization. Journal of Traffic and Transportation Engineering’ 7(3), pp.2328-2142.

Hodges C. (2022). Outcome-based Cooperation: In Communities, Business, Regulation, and Dispute Resolution (Vol. 13). Bloomsbury Publishing.

SURARAKSA J., AMCHANG C. and SAWATWONGN.(2020).‘Decision-making on Incoterms 2020 of automotive parts manufacturers in Thailand’. The Journal of Asian Finance, Economics and Business (JAFEB), 7(10), pp.461-470. <doi:10.13106/jafeb.2020.vol7.no10.461>

Santander. (2023). ‘Export price calculator’, Viewed 04 October 2023, <https://santandertrade.com/en/portal/international-shipments/export-price-calculator>.

Montezuma J. (2021). INCOTERMS, Incoterms, Accessed: 04 October 2023: <https://internationalcommercialterms.guru/incoterms-cif/>

Santander. (2021). ‘Export price calculator’, viewed 2 October 2021,

Santander. (2021). ‘Export price calculator’, viewed 4 October 2023,

Yusen Logistics. (2021). ‘Request a quote’, viewed 4 October 2023, <https://www.yusen-

Yusen Logistics. (2021). ‘Request a quote’, viewed 4 October 2023, <https://www.yusen-

Singstat. (2023). Tourism, Base. Accessed: 04 October 2023. <https://www.singstat.gov.sg/publications/reference/ebook/industry/tourism>

Yusen Logistics. (2023). ‘Request a quote’, viewed 04 October 2023. <https://www.yusen-logistics.com/en/taxonomy/term/166>

Kuehne+Nagel. (2023). ‘Quote request’, viewed 04 October 2023, <https://mykn.kuehne-nagel.com/fs/quotes/2464641/edit>       

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