INTL729: FREIGHT FORWARDING:
Global Freight Management Assignment F’17
Due Friday Jan. 5, 2018 – 20%
To be completed in Student TEAMs of maximum 4
Must be submitted in-class or the School of Business Dropbox (Hardcopy only)
Alice Johnson is materials and distribution manager for Global Logistics Enterprises. She is responsible for all transportation, distribution, materials, and purchasing for her firm.
Alice’s company has just been awarded a new contract that will involve moving medicines from Toronto to Yemen in the area of conflict with Saudi Arabia to be delivered to Medicin Sans Frontier (Doctors Without Borders). She has hired your organization as her freight forwarder, consultant and agent. You have identified two transportation choices:
1) move the freight by water, which takes 45 days, and
2) move it by air, which only takes 4 days, door to door.
The relevant costs in Susan’s decision are as follows:
· freight by water is $2650 with delivery to the dock in New York costing $385 and pier to plant delivery in the Middle East of $225. The air move would be $4,850 for door-to-door service
· documentation using the water mode would be $180 whereas the air move would cost $275 insurance by water would cost $780 per move; with air it would be $260
· packing and crating by water would be $675 per shipment; with air it would only involve stretch wrapping a special set of pallets for a total cost of $120
· the company hurdle rate (opportunity cost of capital) is 11%
· the value of the goods is $1,600,000 per shipment
1. Introduce the project by creating a Freight Consulting Company, writing an introductory letter and a MARKETING document that fully outlines the company background and credentials that qualify you for the role of freight consultant to assist Alice. (see text)
2. Calculate are the total costs of each method of shipping?
a. Without the holding costs (opportunity cost of capital)?
b. Including the opportunity cost of capital?
3. Fully outline the other criteria that you would consider to ensure the product’s safe arrival (packaging, insurance & government partnerships with respect to security, TDG? What other government departments are involved?
4. Research the most appropriate complete routes and ALL modes that will be used in each case and outline them on a map. Select your mode/route and fully justify your decision on mode(s)?
5. Explain the recommended INCOterm and transportation payment terms would you recommend for Global. Justify your answer. Complete the accompanied ICC Model Contract for the transaction and explain your decisions in it. Append the completed contract to your paper.
6. Outline all documentation would needed to support the transaction and ensure she gets paid. Complete full price (estimated) quotation and a full set of relevant documents and append these to the report.