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46 Cards in this Set

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why is global transportation such an important issue?

1.Global economy in a volatile period



2.Much downward pressure on transport rates



3.In an economy focused on cost control, both carriers and their customers must plan effectively

what are the different Global Trade Agreements?

1.Agreements between nations.



2.Bi-lateral agreements.



3.Regional trade agreements.it involves 3+ nations

what are the trades that U.S. currently involved in ?


1.Free Trade Area of Americas.



2.Middle East Free Trade and Enterprise for ASEAN Initiatives.



3.North American Free Trade Agreement (NAFTA).

describe NAFTA principles?

includes U.S., Mexico, and Canada.



1.Unimpeded flow of goods.



2.Enhanced cross-border movement of goods/services.



3. enable transport carriers to move more easily between countries.



4. carriers have same rights.



5.May transport domestic traffic .



6.Same accessibility is not currently available between U.S. and Mexico


what are Logistics Channel Issues?

1.Transaction channel activities



2.A 2nd key transaction channel activity.



3.Communication channel



4.Distribution channel

identify Transaction channel activities, and what are they responsibile for?

A key activity is specifying when and where legal title to goods transfers.



Defines responsibility for:



1.Mode and carrier selection and shipment routing.



2.Obtaining insurance coverage.



3.Payment for transport services, insurance, and import duties.



4.Compliance with regulations, management of goods while in-transit, and financial liability while in-transit

describe A 2nd key transaction channel activity?

it is arranging payment for the goods.



1.Obtaining payment is riskier in global trade compared to domestic trade



2.Advance payment would be ideal for exporter



3.Importer would be concerned about paying in advance of seeing/inspecting the goods



4.There are many terms of payment options used to balance these risks

describe Communication channel?

1.Documentation requirements are much higher for global than for domestic transactions.

2.Organizations requiring documentation include:
a.Countries of export and import.
b.Transportation companies, banks, and the importer.



3.Many documents not in electronic form

describe Distribution channel?

1.Greater distance and complexity of global shipments means higher risk.



2.Requires more diligence in transport mode, carrier and route selection decisions



what areGlobal Transportation Challenges macro level ?


1.General business/economic trends, including fuel prices



2.Changes in governmental regulations and interventions



3.Consumer demand trends

what areGlobal Transportation Challenges Monitoring specific issues ?


1.Trade level fluctuations



2.Carrier consolidation activity



3.Security risks



4.Shifts in regional sourcing

what are Key export preparation activities ?


1.Choosing terms of trade



2.Securing freight insurance



3.Agreeing upon terms of payment



4.Completing required freight documentation

what does Completion Key export preparation of activities helps ?


1.Clarify importer and exporter responsibilities



2.Protect each party’s financial interest



3.Improve freight control and visibility



4.Facilitate problem-free transport

what are Terms of Trade of Export Preparation Activities?

1. responsibilities transfer from exporter to importer



2.Govern decision making authority for movement of the product



3.Establish when and where ownership and title of goods pass from exporter to importer



4.Clarifies which organization incurs delivery-related costs



5.each country could have its own set of trade terms


what would happend if country have its own set of trade terms?


1. uncertainties in the meaning of terms and raise transaction costs



2. a worldwide standardized set of terms and definitions was established
Known as the International Commercial Terms.


describe Incoterms?

13 different Incoterms, divided into 4 primary groups, are available
All 13 apply to ocean transport
Just 7 Incoterms are appropriate for air, truck, rail and intermodal transport
Typically expressed as three letter acronyms with a named location
Examples: DEQ, Long Beach, CA, U.S.A., Incoterms 2000


what are 4 primary groups of Incoterms?

E term



F terms



C terms



D terms

define E term?



E term: Importer takes full responsibility
Consists of just one Incoterm: Example Works (EXW)

define F term?


F terms: Exporter has responsibility for getting shipment from origin to port of embarkation
3 F terms
Free Carrier (FCA): may be used with any mode
Free Alongside Ship (FAS): water transport only
Free On Board (FOB): water only and exporter assumes responsibility for cargo loading

define C term?


C terms: Exporter obtains and pays for main transport leg and/or cargo insurance. 4 C terms:


Cost and Freight (CFR): water shipments only
Carriage Paid To (CPT): any mode of transport
Cost, Insurance, Freight (CIF) and Carriage and Insurance Paid To (CIP): Exporter pays for main carriage and insurance

define D term?


D terms: Exporter responsible for delivery of shipment to foreign destination. 5 D terms:
Delivered at Frontier (DAF): all modes.
Delivered Ex Ship ((DES) and Delivered Ex Quay (DEQ) : water shipments only
Delivered Duty Unpaid (DDU) and Delivered Duty Paid (DDP): all modes. Highest levels of exporter responsibility


what are Managing risks of Export Preparation Activities Cargo Insurance?


1.Decision between retaining or transferring risks.



2.Retaining risk is essentially self insurance. Makes most sense when:



a.Goods shipped are low value or not susceptible to damage



b.Carriers used rarely deliver damaged or lost freight



c.A damaged shipment would have relatively minor financial impact on the freight owner



3.Risk transfer via insurance is appropriate when above conditions are not met



what are financial risks for International shipments ?



1.Significant dollar limitations on ocean and air carrier liability



2.If there is damage or delay, burden of proof falls on cargo owner to prove that carrier was at fault

what are transport perils for International shipments ?


1.Many ocean-related perils, including cargo movement, water damage, overboard losses, and hijacking



2.Perils by other modes are relatively minor

what are Payment for Export Preparation Activities?


1.Letter of credit (LC).



2.Draft or bills of exchange.



3.Sight draft



4.Time draft










describe Letter of credit (LC)?

Letter of credit (LC)
Ensures exporter is paid and importer receives goods as expected
Importer’s bank issues LC to the exporter
Bank guarantees payment provided goods delivered per terms of the LC
Bank uses importer’s line of credit to guarantee payment
Bank charges the importer a fee for issuing the LC

describe Draft or bills of exchange?

Draft or bills of exchange
Similar to a check, except title to the goods does not transfer to importer until draft is paid

descibe Sight draft?

Sight draft
Used when exporter wishes to retain ownership until goods are delivered and payment received
The original ocean bill of lading (showing title) must be presented to carrier before goods are released to importer

describe Time draft?



Time draft
Used when exporter extends credit to buyer
Payment due within time period specified on draft

explain Export Preparation Activities Freight Documentation?

Freight documents control movement of cargo
Mistakes or missing documents inhibit flow of goods
Documentation requirements set by customs regulations of exporting and importing countries
Freight forwarders are documentation experts

what are the Four types of documents ?


1.Invoices documents



2. transportation documents



3.Export documents



4. import documents



describe Invoices documents?


Invoice or bill for the goods
International invoices are more complex and there are several types
Commercial invoice is most common. Must contain:
Description of goods, quantities and value – may impact duties
Country of origin, Incoterms, and parties to the transaction
Pro-forma invoice - actually a sales quote
Used by buyers to estimate total landed costs for potential order
Consular invoice - prepared by exporter
Certified in origin country by consul of destination country


describe Export documents?

Export documents


Used by many countries to:
Develop statistics (types, volume, value) of goods exported
Control exports of strategic materials, national treasures
For exports from U.S.,

what are documents required for export documents?


1.Shipper’s export declaration (SED)
Required on all exports exceeding a nominal value and all exports requiring an export license



2.Export license
Used to control export of sensitive materials to selected countries



3.Certificate of end use
Purpose: assure exporting country that product put to intended use



describe Import documents?


Protect citizens from inferior quality products
Properly classify products for collection of duties
Limit imports of products deemed inappropriate
Certificate of origin
Most widely required import document
Indicates shipment origin, but not location of production
Used to determine appropriate import tariff


Other import documents
Phyto-sanitary certificates
Certificate of analysis
Certificate of certification


define certificate of origin?

Certificate of manufacture
Indicates location of product production
Also used to determine appropriate import tariff
Certificate of inspection
Attests to authenticity and accuracy of description of the goods shown in the commercial invoice

describe Export Preparation Activities Transportation Documents?

1.Carrier manifest
Lists critical information needed to perform the transport service



2.Bill of lading – primary transport document



3.Transport documents are largely paper-based

define Bill of lading?

Bill of lading – primary transport document
Contract of carriage between cargo owner and transport company
Serves as receipt for the goods
For international shipments, ocean bill of lading and air waybills are used



what are types of bills of lading?


1.Through bill of lading



2.Intermodal bill of lading



3.Negotiable vs. non-negotiable bill of lading
If non-negotiable, carrier must deliver only to consignee named on the bill
If negotiable, the person possessing the bill has the right of ownership to the goods


Transport documents are largely paper-based what is the effect of shifting to electronic work ?


Major challenge: move toward electronic document format
International Air Transport Association e-freight initiative
Intended to replace the 20 most widely used paper documents with electronic messages
Anticipated to reduce costs by $4.9B, improve accuracy, and speed transmission of information



Other U.S. electronic document initiatives
Automated Commercial Environment
Auto. Brokers Interface System, Auto. Export System

what is types of bills of lading Transportation Planning?

Decision must achieve best fit and balance between:
Modal service capabilities
Accessibility, capacity, transit time, reliability, safety
Product characteristics – size, durability, value
Supply chain requirements for speed, service, cost
Decision must also align with corporate strategy, control risk and provide required level of customer service


what affect the decision on Carrier Selection?

Decision based on best fit and balance between:



1.Geographic coverage



2.Average transit time and reliability



3.Reliability of on-time pickup and delivery



4.Technical capabilities, ability to share information



5.Equipment availability and capacity



6.Product protection/carrier’s freight damage experience



7.Carrier’s financial stability and freight rates

what are the Carrier selection strategies?

1.Leverage transportation dollars by using a limited number of carriers



2.Build relationships with service providers



3.Monitor carrier performance, rates, and financial stability



4.Have contingency plan with back-up carriers


what Differs from mode selection decision?

1.Many more options to choose from



2.Decision made more frequently but not for each move

define Route Planning?

Carriers primarily responsible for routing
However, shippers should have input to ensure proper consideration given to:
Customer satisfaction and supply chain performance
Efficiency and product safety during transit

who should Routing decisions be ?


1.Coordinated with mode and carrier selection



2.Aligned with global sourcing, inventory, demand fulfillment strategies