Discussion Exercises
Discussion Assignments and Mini-cases
Chapter 13 Distribution Strategies: Physical Distribution and Documentation
- Is there an ideal mode of transportation based on market location, speed, cost, and hazard criteria?
There is no ideal mode of transportation which can satisfy all shipping criteria. Air transport, for example, is superior in terms of speed and packing, but transportation cost is its drawback. Water transport, in contrast, has low cost for bulk shipment, but the advantages of cost and bulk are neutralized by the hazard and speed problems. Therefore, whether a certain mode should be used depends on the criteria deemed important to the exporter and the importer.
- What products are suitable for air shipping?
Products which are suitable for air shipping are perishables and expensive products. Air shipping is also desirable in the case of machinery, equipment, or component parts which require quick replacement due to costly downtime. In addition, the value-to-weight equation points out that air cargo is suitable for high-value products due to the amount of capital tied up. The freight rates-density effect offers another useful suggestion because it explains that it is reasonable to use air freight for such low-density goods as ladies' shoes, men's shoes, computers, color TV sets, refrigerators, and towels.
- Explain how containerization can solve the four packing problems of weight, breakage, moisture, and temperature, and pilferage and theft.
Containers can take care of most of the four main packing problems. Because of a container's construction and durable material, a product does not have to have heavy packing. The container by itself provides good protection for the product against breakage, moisture, and temperature. Because breaking into a container is difficult, this method of shipment discourages pilferage and theft as well.
- What are the functions of a freight forwarder and a customhouse broker? Is it worthwhile to use these agents?
A foreign freight forwarder is an exporter's agent who performs virtually all phpects of physical distribution necessary to move cargo to overseas destinations in the most efficient and economic manner. Its major contribution to the exporter is its ability to provide traffic and documentation responsibilities for international freight movements.
A customhouse broker is a person or firm licensed to enter and clear goods through customs for an importer. The broker's bond provides the required coverage to carry on the responsibilities of the job.
In most cases, the services of the freight forwarder and the customhouse broker are indispensable and valuable because the requirements for customs clearance are complicated. They are specialists who can handle the voluminous paper work required in international trade.