HOW DOES GLOBAL LOGISTIC WORK?

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Introduction

Brace yourself, this is a long post.

I’m sitting at my office looking at my surrounding, I start to wonder: How many of these items are actually made in my own country?

The coffee mug I’m using is imported from China, the white cotton shirt I’m wearing is from Bangladesh, the Basmati rice I ate this afternoon is imported from Thailand.

We constantly emphasize in all our posts that the world is getting smaller, well to prove my point, look at your surroundings, chances are that most of the things you touch are from another country.

All of this came about from the advent of increasing efficiency in transporting goods. The miracle of being able to consume fresh and live lobsters from Canada at our local restaurant is mind-boggling. Just step back and consider the minute details of how to even start planning to carry fresh lobsters across borders, it is really astonishing how “logistics” that was once a necessity can be so engraved into our behavior in modern consumerism.

Yet, do we really sit back and consider “How does logistic work?”. Sure, we generally know the stuff we buy comes in containers, transported by air, by sea or by land, and reaches your doorstep within a few days. But, peeling back the elements that make this giant system work, understanding “How does logistic work?” will allow you to appreciate your newly shipped Beats by Dr. Dre headphones from Amazon more.

Insofar we have only looked at items that you are directly consuming, what about the lesser-known items? The ones that you may not notice and therefore overlooked. We are talking about intermediate goods, like semi-processed conductors and raw materials, like cobalt or lithium.

World’s second-largest lithium-ion site, Chile, Source:chemicalsbox.com

These are the basic materials that are needed to assemble your handphones. More importantly, someone from somewhere had to assemble it, do they have an assembly in every country to meet their demand? Or there is an active distribution network across the globe.

Look at handphones again as an example, cobalt is mined from Chile, microchips are manufactured in Taiwan, LCD Display manufactured in Korea, and lastly, the handphone is assembled in China. It is really a wonder that a quality handphone is sometimes even less than USD 300.00 a unit.

So, in this post, we will try to tackle the broad question of “How does Logistic Work?” in as much detail as possible, without being overbearing with the technical jargon.

What is Logistics?

“It is rarely a mysterious technique that drives us to the top, but rather a profound mastery of what may well be a basic skill set.”

Joshua Waitzkin

Josh Waitzkin, was only a child when he was recognized as a chess prodigy. The key fact that propels his chess career is the way he learned to play chess. Which, is by understanding the pieces of play one at a time, peeling back the complexity to its core element only. Mastery in the basics is paramount.

So, forget all the textbook definition, understand only that logistics is about getting an object or a person from Point A to Point B.

The complexity behind the whole economical machine of logistics is inconsequential. We can slowly build our understanding of logistics by breaking it down brick-by-brick.

Firstly, there are only 3 modes of transportation:

  1. Land Transportation
  2. Sea Transportation
  3. Air Transportation

Regardless, the end goal of transport logistics is to bring the object or person from Point A to Point B. We will dive into the mechanics of each mode of transportation to understand “how logistic works”.

Secondly, it is rarely the case where the cargo arrives at it’s intended destination or user without going through multiple modes of transportation.

For instance, landlocked countries like Switzerland, Austria, Azerbaijan, etc require multi-modal transportation, also known as using multiple modes of transportation.

Landlocked countries inaccessible by the sea – source: commons.wikipedia

Another instance is when an object is an unfinished good or still considered as stock, they are transported to an area of storage first before additional manufacture processing or before an order is placed for the stock. It is still considered as part of the logistics as the object is coming from Point A to Point B, just that it is pending delivery.

Thirdly, there are many stakeholders participating in transporting the goods. Carriers, NVOCCs, Freight Forwarders, Forwarding Agents, Warehouse Operators, Container Depot Operators, Seaport Terminals, Airport Terminals, Distribution Centres, Truck Drivers, Pilots, Sea Captains… It is important that we understand the main players in the industry

All of them are tasked, once again, to bring an object or a person from Point A to Point B. No matter how many stakeholders are involved in the role of logistics, the final motive is still the same.

Fourthly, since there are many stakeholders involved in logistics, we all need to operate with a given set of rules and regulations, whether it is local or international. Different stakeholders are governed by different rules, regulations, and conventions. This ensures that the interest of all parties involved in the logistics chain is protected. Even the environment is protected by rules and regulations, we only have one world after all.

To further elaborate, uniformity is key for smooth operation. How we maintain a smooth logistic transportation operation is with universally accepted standards of shipping documents.

To understand logistics in a broad sense, we need to understand that the core element of logistics transportation. Once we understand that, we can add in the complexities to form a spider-web of understanding of how logistics work. We are not deep-diving into specific details of the aspects of logistics, but we hope this post provides the broad strokes to point you in the right direction.


The 3 modes of transportation

Rail Transportation

Railway transportation was a far more utilized mode of land transportation during the late 18th century before roads and cars are properly developed for commercial intents.

The main cargo that railway transportations were built for is coal, in lieu of the boom of the industrial revolution that John Watts kick-started with the invention of the first commercially viable steam-powered engine.

It is safe to say that John Watts catapulted the western civilizations into stronger economic powerhouses. Railway locomotives and steam-powered tugboats can travel further, and carry heavier loads.

Steam-engined locomotive, Image from page 128 of “Locomotive engineering: a practical journal of railway motive power and rolling stock” (1892); Flicker

The British, the Americans and the Europeans waste no time in exporting their technologies to colonized countries, in order to capitalize on the vast wealth of natural resources. All these are in efforts to feed the industrial revolution further.  Most of the railway facilities built by the western colonies still are in use to date in one form or another, and also formed the backbone to develop the transportation facilities of the developing nations. To this, we have the British Empire to thank.

The fleet of the East India Company homeward bound from China engaging and repulsing a French squadron near the Straits of Malacca, on 15 February 1804 .
Source: Wiki.Commons
Symbol of colonialism

Naturally, only highly developed nations with vast amounts of wealth and political might, and arguable, “malleable” ethical codes are able to pull off such awe-inspiring technical feat.

The building railroads stretching thousands of kilometers are, in my opinion, the cornerstone of homo-sapiens technological capability.

The Transcontinental Railway in America, for example, should be touted as the 8th Wonder of the World, built one inch at a time to stretch 1776 miles. The same year of the birth of the United States of America’s independence.

The ceremony commemorating the driving of the golden spike on the first transcontinental railroad in North America, May 10, 1869.
Source: Commons.Wiki

I digress, here is a really helpful video to help you appreciate the importance of rail transportation

Source: Wendover Productions Channel on Youtube

In the modern era, rail Transportation lies within the Goldilocks spot of neither too costly or too cheap to operate. Just as the video summarizes, the nations that tend to rely heavily on rail transportation are those with large landmass and highly developed economies.

What does the future hold for the industry of railway transportation? Surely this centuries-old technology has nothing more to offer?

Answers may vary depending on if you are a nation ripe to be the economic powerhouse that splits opinions (China), an influential political figure with lobbyist driving through that coal power is still sustainable (Donald Trump), or a real-life Tony Stark genius, playboy, billionaire, philanthropist (Elon Musk). They all have different visions, and the development of rail transportation has become moot.

China

China’s vision comes in the form of the Belt and Road Initiative. In which distance traveled and the area covered is perceived to be the future of railway transportation. The Yiwu-London lane takes 18 days to cover 12,000kms from end to end.

The intended net effect of this development is to bring economic prosperity to sovereign nations or states that weren’t afforded that luxury before. Nations such as Poland, Belarus, and Kazakhstan stand to benefit from being the via-points of the railway line.

Donald Trump

 Understanding Donald Trump’s vision for the future of railway transportation is much less confusing if we assume that the 45th President of the United States of America prefers the status quo, and does not believe that climate control is a serious issue that plagues humanity.

Donald Trump Credit: Dominique A. Pineiro; OCJCS

To name a few examples of backwardation of President Trump’s transport policies:

  1. Reversing the requirement for the advanced braking system;
  2. Reversing the NAFTA trade agreement which aids as an economic catalyst that will stimulate railroad transportation use;
  3. Reversing the electrification of San Francisco Bay commuter rail system.

These numerous reversals draw a clear picture of President Trump’s movement in rail development; Backwards.

Elon Musk

Elon Musk’s vision, on the other hand, takes a revolutionary step instead of an evolutionary one.

Hyperloop
Source: The B1M

Touted by Musk as the “fifth mode of transportation”, Hyperloop has a slight resemblance to rail transportation in which it has a fixed-line guiding the gondola/pod from one point to another.

What is different in Musk’s design is that Hyperloops eliminate friction as much as physically possible to a point that the Hyperloop pod can travel up to 760 mph, roughly the speed of sound. Passengers of the Hyperloop now travels the same speed as jet fighter pilots do.


Land Transportation

Land Transportation can be further broken down into rail transportation and road transportation.

More often than not, land transportation is what we call the “last mile” delivery transportation. It is the trucks and vans you see on the road day-to-day, driven by our unsung heroes of transportation. Unless the final destination is located in the middle of the sea. We will need truck drivers and train conductors to vessel our precious cargo to us.

There are many types of truck, but to simplify things, we can break it down to 3 forms of cargo trucks

Trailer Trucks

The Semi-Trailer, or what is called a “Semi”, is a truck without the fixed tractor unit load at the back. Optimus Prime is a Semi-Trailer truck.

The Full-Trailer trucks, on the other hand, a truck with its tractor fixed onto the rear. It is frequently used for transporting conventional cargos.

Trailer Truck Source: commons.wiki

This is an important feature because in modern transportation cargos are shipped in container boxes in 20-footer or 40-footer containers latched onto a trailer. The trailer is essentially tractors without the front axle and engine.

The Full-Trailer trucks, on the other hand, a truck with its tractor fixed onto the rear. It is frequently used for transporting conventional cargos.

Vans

Vans are basically motor vehicles that are used to transport loose and small items. Unless you are living under a cave, you might have seen a van on the road. Here are some image references, just in case you don’t know.

Transport Van Source: https://connecteam.com/8-most-recommended-cargo-vans/

Special-Purpose Trucks

Flatbed Trucks

Trucks where the bodywork is flat in order to load cargo with unique dimensions.

Reefer Van

A special-purposed vehicle that has a temperature control unit that can transport temperature-sensitive goods

Tipper Truck

A special-purposed truck with a hydraulic arm to top the trailer at an angle. So that the cargo can be unloaded quickly without manual labor.

Tipper Truck, Source: Commons wiki

Sea Transportation

Of the three modes of transportation, sea transportation is the slowest option, with its average transit speed of 15 to 17 knots or 28km/hour. Nevertheless, almost 90% of cargo transportation is transported by sea.

Here is a beautiful visualization of the global cargo ship movements in 2012, for more information, please head over to their website to get the full view.

Wind, water and time erosions form the beautiful world we live in, just as how Dr. Jean-Paul Rodrigue describes, the fluvial artery of maritime transportation we know today is formed from centuries of trade.

The spine of maritime transportation of which most of the cargo flow through is the Indian Ocean, across the Bay of Bengal, the Pacific Ocean, and the Atlantic Ocean. Coincidentally, these are the oceans that connect major continents.

Before the invention of motor vehicles and rails, boats were the predominant mode of transportation, as historians discovered the earliest evidence of boat during the 4th millennium BCE, roughly 6000 years ago. Comparative to the first modern automobile car dating back to 1866, the invention of boats played a more significant role in economic developments.

I like to focus on the understanding of modern maritime transportation by peering into the shipbuilding sector first.

The Korean Admiral Yi-Shun-Shi, during the 16th century, designed the famous turtle ship in order to combat the Japanese Invasion. At that time, it was state-of-the-art, a few turtle ships are capable of toppling hundreds of Japanese naval ships.

The art of shipbuilding is somehow embedded into the South Koreans, and the South Koreans now emerges as the largest shipbuilders of the world. Together with Japan and China, they produce 90% or more of the global ships demand.

Korean Shipyard, Source: the Bunkerist

A combination of strong governmental support, economic, and social-economic factors has contributed to South Korea’s rise as a dominant market force in shipbuilding, it has since been usurped by the meteoric rise of China.

Peering into the shipping industry, much like the aviation industry which will be discussed below, there is a real manifestation of the Pareto principle, where 90% of the deep-sea market transportation is shared among only 10 major shipping lines.

  1. Maersk Line
  2. Mediterranean Shipping Line
  3. CMA-CGM Line
  4. Hapag-Lloyd Line
  5. COSCO Line
  6. Evergreen Line
  7. Orient Overseas Container Line
  8. MOL Line
  9. Yang Ming Line
  10. NYK Line

Types of Maritime Vessels

Containerized Cargo Vessel

Containerized cargo vessels are made specifically to transport cargos loaded into uniform container boxes, the most common boxes being the 20-footer container and the 40-footer container.

The idea of using containers to ship goods seems intuitive because it helps speed up loading and unloading between modes and modals of transportation. Containers also stack like Lego bricks on vessels which helps with general stability and traceability. It is intuitive, but it was only envisioned by a trucking company owner, Malcolm McLean, during the 1950s.

Before that, all cargos are loaded into vessels manually by stevedores. Truly a logistical nightmare. The containers simply made vessel loading easier, faster, and safer.

Container Vessel, Source: Common Wiki

Breakbulk Cargo Vessel

Breakbulk, as the name suggests, are bulk cargos broken into manageable bits for transportation.

These are cargoes that are so big it can’t fit into the conventional containers available, or general, homogenous packed cargos that are large in quantities that it does not make economic sense anymore to store the cargo in containers.

Examples of a breakbulk cargo that are out of gauges could be heavy machinery, oil rigs, and plane fuselages, and examples of breakbulk cargos that are packed homogenously are cargos in barrels, drums, casks, bails, bagged or sacked goods. 

Liquid Bulk Vessels

Specialized tanks are built into the hull of the vessel to house cargos in liquid forms. There are salient features that only a purpose-built liquid bulk vessel cargo can offer.

Liquid bulk cargos are stored in compartments or holds. Compartments ensure that there can be multiple types of liquid cargo stored, it also acts as a safety measure preventing excessive spillage.

Liquid bulk cargos are mostly also dangerous to transport. Crude oil and liquid gas, for example, are both combustive materials that power the world. They are transported regularly with liquid bulk vessels. This way the structural integrity of a liquid bulk carrier is a priority, the hull of the vessel is fortified to reduce leakage as a result of structural damage.

Specialized Vessels

So long as there is a big enough commercial motivation to move a specific type of cargo, there is bound to be a specialized vessel for that particular cargo. Here are some of the examples of specialized vessels in use today.

  1. Liquified Gas Carriers
  2. Ro-Ro Carriers (Roll-on, Roll-off)
  3. Livestock Carriers
  4. Reefer Carriers

Air Transportation

The development of military aviation precedes the development of civil aviation, primary due coincidental events of the invention of the heavier-than-air planes and the First World War in 1914. As desperation spurs creativity and invention, whoever dominates the air dominates the “War of Movement”. Hence, the Allied Forces and the Axis Powers race to utilize the “Air Movement” to gain a tactical advantage over its enemy.

Wring Brothers first heavier-than-air flight, Source: Common Wiki

On the bright side, one of humanity’s bleakest moment in history has a beneficial side effect. The Wright Brothers and/or Anthony Santos-Dumont invented heavier-than-air flight in their own rights, the First World War then fast-forwarded the industrialization and worldwide application of the airplane.

It is also an era where the most robust duopoly arose, Boeing and Airbus, where 99% of today’s aircraft are supplied by either company, not even Coca-Cola and Pepsi can topple a 99% market share.

747-8 First Flight Everett WA Source: Commons Wiki
Airbus A380, Source: Common Wiki

There are no other modes of transportation that rival air transportation in its uniqueness. First and foremost, it is the youngest of the three modes of public transportation yet arguably the safest mode of transportation.

About a century ago, a few years prior to the First World War, Count Zeppelin has flown over 30 thousand passengers on board of their LZ Zeppelin series of hydrogen airships, at a cost of 200 Deutch Mark for a 2 hours voyage that covers less than 60 miles. Along with it comes the perilous danger of irregular wind and static build-up potentially spells death to the passengers on board.

Adjusting for inflation it is equivalent to USD 1300 in 2020, for the distance traveled per US Dollar, a gentleman with the privilege to travel on the LZ Zeppelin will be paying about USD 20 of current dollar value per mile traveled, while modern aircraft transportation average cost USD 0.17 cents per mile traveled.

LZ Zeppelin in Essen, Source: Common Wiki

Fast Forward to the modern aviation industry, the demand for air cargo transportation has never been higher. From its humble beginning as the de facto mode of transport for airmail, the demand for air transportation is hoisted to a whole new level with the E-commerce sector. Amazon, E-bay, and Alibaba, to name a few, have carved a significant portion of air cargo demand. E-commerce has redefined the logistics business model that only can be underlined as a welcome change to the aviation sector.

Air transportation provides an interesting proposition that differentiates it from other modes of transportation.

Just like how we described in this blog post. Users prefer air transportation for the following reasons:

  1. Transporting Perishable Goods, or live animal that has a limited lifespan
  2. Cargo with an ultra-high value that requires additional security
  3. Cargoes in small quantity or small volume metric weight
  4. Priority cargoes that are required yesterday

Air transportation also arguably has the largest connectivity among the other modes of transportation. As long as there is an airport in that location, even a place as remote as the North Pole is accessible.

Multiple Modes of Transportation

Realistically speaking, you wouldn’t expect that logistics are arranged by just using one mode of transportation. It is predominately a combination of transportation modes. The best qualities of land, sea and air transportation are utilized in order to concoct the best solution for one’s logistics needs.

Long gone were the days where stevedores spend days to load/unload cargos from ships and repeat the same process of loading it onto locomotive transporters or trucks, with the invention of the shipping container. The shipping container, or the “Box”, was created by the American Malcom McLean. The first commercial attempt of homogenized shipping containers was done during the 1950s by the inventor himself.

Since then, intermodal or multimodal transportation kicked into fifth gear as it is more efficient to load. Subsequently, it is also easier to develop bigger and better ports, truck trailers, and train gondolas as the shipping containers are now standardized. The world has gotten smaller.

This is also where the freight forwarders and ancillary logistics service providers earn their bread and butter, coordinating between different modes of transportation in order to deliver cargos from point A to point B. The port operators do not run the shipping companies, the customs brokers do not have their own port, the shipping companies do not own truck trailers and so on. There is no way for any individual company, whether state-owned or private, to own all the puzzle pieces that are involved in transporting goods.

The evolution of global logistics has spawned many freight forwarders and logistics service providers that play a role in the supply chain. We will discuss this further in this blog post.

Let’s examine three possible alternatives for the delivery of one pallet’s worth of T-Shirt from Shanghai, China to London, Great Britain.

Option 1

Land-Air-Land

You can arrange a delivery truck to pick up the pallet from the manufacturer, delivered to the nearest Airport, the Shanghai Pu-dong International Airport.

Then arrange for a flight from Shanghai Pu-dong Airport to London Airport. Finally, once the pallet has cleared local customs, the pallet is delivered by a delivery truck to your warehouse for safe storage.

Approximate Delivery Time: 4 Days

Option 2

Land-Sea-Land

Instead of using air, you place a booking with a vessel operator. They will consolidate your cargo into containers.

After 2-4 weeks of the sea voyage to the Port of Felixstowe, your pallet will arrive at a customs warehouse. Once the customs officer gives the clearance, a delivery truck takes the trip from Felixstowe to London to deliver your cargo.

Approximate Delivery Time: 1 Month

Option 3

Land- Land (Rail) -Land

This is a new trade transportation alternative, a part of the Belt and Road Initiative by China.

Potentially, a driver truck picks up the pallet from Shanghai and make the trip to Yi-Wu, a brisk 4-hour drive. The pallet is once again consolidated into shipping containers and then loaded onto freight trains.

After a 17 days commute inland, the train arrives at the London Rail Terminal. The containers will be de-consolidated and finally, a delivery truck will transport your pallet to the location of your choice.

Approximate Delivery Time: 17 Days

Service Providers of Transportation

Gelling it all together is the logistics service provider that comes in many forms.

Freight Forwarders

The International Federation of Freight Forwarder’s Association (FIATA) has extensively defined a freight forwarder that is summarized by mentioning that a freight forwarder is the “De Facto total supply chain management”. A quirky way of saying that a freight forwarder acts on behalf of traders to do everything that can be categorized as part of supply chain management.

It is easier in my view to compare a freight forwarder as a construction contractor. A contractor’s main aim is to erect a house, consigning to multiple specialized subcontractors to undergo the building process. For example, the main contractor will hire a specialist in glass fabrication, another specialist in paintwork, another specialist bricklayer. The main contractor orchestrates and brings together all the pieces together to a common goal of building a house.

Similarly, a freight forwarder, instead of a house as a project, the underlying project could be anything logistics-related such as storage, packaging, supply chain, assembly, etc… The freight forwarder orchestrates all the “subsidiary” logistics service provider to piece together a service in which the client needs

Custom Brokers

The Role of custom brokers is fluid. According to the World Custom’s Organization (WCO), an institute where its participating nation adopts and implement custom and trade system and regulation, there are several definite roles that a customs broker play.

  1. Preparation of documents related to cargo release and clearance
  2. Liaison with other governing agencies related to trade
  3. Payment of duties and tax
  4. Consultancy of current trade regulations
  5. Customs dispute coordination

In sum, a customs broker acts on behalf of traders as a liaison to local customs and government agencies to ensure the rules and regulations are adhered to and the duties and taxes outstanding are paid to the government.

Truck Operators

Truck operators manage a fleet of trucks that caters to either freight forwarders representing its client or the traders directly.

Companies that are large enough may also maintain their own fleet of trucks. Companies PepsiCo, Sysco, Walmart, and Coca Cola has the economies of scale on their side in running their own transportation fleet.

The principal is the same, truck drivers haul cargos in their semi-trailers from point A to point B so long as the destination is accessible by road.

Container Yard Depot

Container Depots emerged to remedy the surplus shipping containers’ storage issue. Containers are essentially either Shipper Owned Container (SOC) or Carrier Owned Container (COC).

The majority of shipping containers are owned by the shipping lines, but since a net trade flow of a country is almost never in equilibrium, meaning that the number of shipping containers flowing in or out of a country will never be equal. There will always be a necessity to store the unused container at a depot for further use.

Since container depots store containers, they also serve as contractors to maintain, fix and repair the stored containers.

The emergence of container depots also helps alleviate traffic congestions with strategic positioning. Especially for countries with developing road infrastructures such as Bangladesh where port congestion is an issue.

Shipping Lines

To some extent, the shipping lines are covered previously in “Sea Transportation”. In the interest of simplifying the explanation, shipping Lines are the ship owners, where their company’s brand name and logo are proudly printed on the hull of the ship. These behemoths, technologically advanced ships scattered across the seas, carrying on average 8,000 containers at a time across the ocean.

Shipping Agents

Shipping Agents are distinctly different from a Shipping Line Company, but their relationship is of a symbiotic nature. Principally, a shipping line operating in a particular country requires coordination with local authorities and port operators.

Hence, a shipping agent as a representative of its’ principal shipping line in undertaking the operating tasks. There are over 300 countries and the shipping line realistically cannot send their personnel to every country to man the day to day operation. This is where shipping agents differ from the shipping line, as they might not have the same name as it’s principal.

For example, in Nigeria, Mediterranean Shipping Line (MSC Line) appoints Comet Shipping Agency as a shipping agent to undergo operations on behalf of MSC lines such as crew transfer, custom documentation, Bill of Lading documentation, and bunker arrangement.

Consolidators

What if your cargo does not require a full container to transport? And you want to benefit from the cost savings from transporting your cargo by sea?

Less than container load shipment generally operates similarly to a Full container load shipment. With the exception that you are sharing the container with other shippers who also do not need to use a full container to transport.

These less than container load shipment call for consolidators to organize, store and load your cargo to a container.

This service is not exclusive to sea transportation only, as consolidators are also utilized for long haul trucks, rail transportation, and air transportation.

Consolidators have a separate contract with the air/sea liners for cargo space and later look for consignments to fill those cargo spaces.

Airlines

American Airlines, Delta Airline, Lufthansa Air, Air France, United Air Emirates. These are some of the successful airlines that have become household names when it comes to passenger travel.

The lesser-known airlines are such as Emirates SkyCargo, FedEx Express, UPS Airline, Cargolux, and Cathay Pacific Cargo. These are successful airlines in their own right as they are amongst the highest recorded freight ton per kilometer carriers.

Just as mentioned previously, the aviation sector is the youngest transportation industry. They are responsible for carrying over 220 thousand metric tonnes worth of cargo in 2018 according to the World Bank.

Rail Operators

As we mentioned above in the Rail Transportation section, although it is the oldest form of land transportation, it is ripe for innovation. Railroad transportation is significantly less expensive than transportation as they can hundreds of containers with one haul rather than just 1 container by 1 truck operator.

Freight rail transport operators are in the business of moving heavy load freight over a fixed track infrastructure.

Predominantly, freight rail operators are more effective than road transportation in carrying cargo in bulk, such as coal, grain, rock, soda ash, cement over a long distance.

Port Operators

Port Operators or Terminal Operators receive the ships and airplanes and provide supplementary services for the ship owners and plane owners.

For a seaport, they provide services such as bunker refueling, gantry cranes to load or unload containers, crew resting stations, principal custom areas for customs, tug boat operators to berth the gargantuan ships, container storage yards, container weight bridges, and container freight stations. 

For an airport, part of their revenue comes from aeronautic and non-aeronautic operations. They provide cargo facilities, parking bays, custom facilities, storage space, fuel, and security.

It is good to note that the primary clientele for seaports are the sea liners whereas the airport’s clientele is the airlines. Make no mistake that the more attractive the port operators are, the more sea liners and airliners they can attract and be more profitable.

Customs

Customs are the guardians of a country, any goods or person going into or out of the country has to be approved by Customs.

Every country’s customs department has to strike a balance between implementing rules and regulations that screen goods imported, and at the same time not being too strict that will deter importers from importing goods into the country.

A country’s custom ruling also reflects the overall trade strategy of the nation. Customs can impose a heavy tariff, permit requirements and excise duties on goods imported in order to protect local manufacturers. For instance, the importation of household electronic goods has to be certified by international standards in order to ensure consumers are safe to use them.

In contrast, they can also promote certain goods of trade by eliminating trade tariffs and permit requirements in order to encourage the importation of certain goods that the nation deems necessary.

Warehouse Operators

A warehouse is where goods are stored over a period of time. Simple as it sounds, there are complications in goods storage that requires the careful planning of warehouse operators.

Namely, the storage of dangerous goods without proper care can spell disaster. The most recent case happened in Tianjin in 2015 where 800 tonnes of ammonium nitrate exploded and killed 173 men. Turns out it was the negligence of the warehouse operators in storing the hazardous ammonium nitrate. The after-effects are devastating and warrant closer scrutiny on how proper warehouse storage procedures cannot be forgone.

Warehouses can vary in their function and capability, but really, it’s underlying motive is to store goods until further required at an environment that is safe and secure.

Essential Logistic Documents

There is a plethora of logistics documents, documents in paper form that has been in existence well before the advent of E-documentation. Hence, despite the fact that there are more advanced, alternative ways detailing, authenticating, and transferring information from one party to another, many standards, rules, and regulations are set with documents in mind.

The logistics sector is ripe for innovation in terms of logistics documentation. But until the legacy and limitation of physical documents are fully understood by all parties, we will still depend on logistics documents.

While we do not intend to provide a glossary of shipping documents as this post is intended to offer broad strokes about everything logistics, here are 3 of the most important documents in all transportation endeavors:-

Bill of Lading

A bill of lading, depending on the terms and types of bill of lading, is primarily a contract of carriage between the carrier and either the shipper or the consignee (importer).

The reason why we mention that the party to the contract is either between the carrier and the shipper or the consignee is that, the terms of transportation are chiefly determined by the buyer and the seller first. The carrier simply acts upon the terms of transportation that is pre-arranged.

Of course, there are standards and implications that come along with a Bill of Lading that all parties to the contract must adhere to. We can understand further in this post,

A bill of lading includes all important information including: –

  1.  Shipper Information
  2. Consignee Information
  3. Cargo Information
  4. Carrier Information

Again, we will not go in-depth to all the intricacies of a Bill of Lading, but essentially, all modes of transportation that cross borders between countries require a Bill of Lading in one shape or form.

Invoice and Packing List

Invoice is a document of proof of a sales rendered between a buyer and a seller. It includes the cargo value and the details of the cargo. Whereas a packing lists the shipment’s weight and dimension of the goods.

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