Importing Cars From Overseas to Australia - Essay Example

?BUSINESS REPORT Importing cars from an overseas country to Australia ASSUMPTIONS: I have been appointed as the logistics solutions provider for the company Logistics Services Australia. The company is not a publicly owned one but a privately one and its services range from national freight management to global freight management and metropolitan transport. At LSA, we have recently had a new client. The client is a car dealer who wants us to take care of their logistics as a third party logistics provider and take charge of the import of their cars from over-seas to Australia for their current consignment. The name of the client company is Peter Warren Automotive. It is located in Sydney and their most recent consignment is stipulated to come from US. The origin of these cars would be from Baltimore, USA and they would be transported to Australia. Other information: The consignment that needs to be taken care of is worth 50 cars and comes from a ware-house in Balti-more to Sydney in Peter Warren Automotive’s ware-house. The cars are Chevrolet Conair 1996 and weigh 4000 pounds each. LOGISTICS Solution: There are two viable methods which could be considered: Air Freight or Sea Freight We will offer insight into each of this method, what are the advantages and dies-advantages and then opt for the best method. Air Freight: Shipments to different parts of the world are not a huge ordeal today. Technology and globalization has made things a lot easier today. This was a feat which was unimaginable a few years ago. Air-freight shipping makes it easier to send merchandise between continents. It also makes it cheaper which otherwise would have been a very expensive affair. Air freight makes distribution of product to any remote location in the world easier and possible. There are various other advantages those air-freight offers with it. If we opt for this method, it would mean that the lead-time would be shorter compared to the lead time offered by ship freights. This form of shipping is a guaranteed safe transport and arrival at the destination. Quiet unlike truck freight, there is no trouble finding the local airport and the route. Another very important and valuable service that comes with air freight would be the tracking facility. The cargo can be tracked at any point in time. On the whole air freight shipping is a very lucrative method of transport. It has its own advantages and disadvantages. However, still air shipping is the very feasible because of the low costs and shorter lead times. Things generally don’t go wrong with air-freight shopping. However, where our consignment is concerned, shipping 50 cars through air space can turn out to be a huge ordeal and neither will the air space are able to accommodate so many cars at a go. Another option that can be considered is Sea Freight. OPTIMAL TRANSPORT MODE: Sea Freight Shipping Why Shipping? - Advantages and Disadvantages Since this is a huge consignment and needs to be dealt very carefully. The most obvious option to be considered for getting the cars to Sydney would be through Shipping. The cars would land at Sydney’s Port Kamala and from there would be taken to Peter Warren Automotives ware-houses and show rooms. The advantages of using sea transport are a plenty. Firstly ship transport gives logistics solution providers the liberty to conduct the transport in containers of different sizes. Secondly, this is the most ideal way of shipping for bulky goods like car that have longer lead times. Where the disadvantages are concerned, this mode of transport is slightly more costly. During the freight movement journey it would be difficult to keep track of the exact location of the goods in transit. Ship transport Options available: There are three different options that can be considered for shipping the cars over-seas from Baltic-more to Australia. They are as following: 1. Through RORO – Roll on and Roll Off 2. Cube Container shipping 3. Exclusive container. 1. RORO – Roll on and Roll off In RORO, there are decks of huge open hulled vessels. On these decks, trailers detached from tractors can be loaded. It is this type of loading which is called roll on and roll off loading. When loading, the dock workers are driving wheeled containers. House trailers, automobiles and trucks for international shipping of automobiles are also driven. Generally, it is easier to load and unload wheeled containers through this mode. These could be cars and trucks. Dock workers tend to drive the vehicles on their own wheels. Ships that have roar traffic have doors stationed inside the hull. These doors spring open and are aligned to the ramps. The docks are there to help ship the car over-seas. When the car reaches its destination over-seas the unloading of the ship would require special docks. The cars are taken to specially allotted places on the vessels for the car to be shipped. Similarly the cars are loading off from the vessel by dock workers driving them out of the ramp. The ramp is again aligned with the cargo dock. This method is relatively simple and cheap. Through this method vehicles will be driven directly out of the vessels and would be secured on the car decks. The vessel is made sure to be wind and water tight. . Exclusive container In this car shipment over-seas can be done through an exclusive container. This method is also offered by our company. Under this method, the customer will be granted access and control of the automobile and container for shipping it to Australia. What we would do would be just ensuring that the containers are positioned at the right place when the cars are being loaded. Once this is through, the professional car loader will drive the car to ship it over-seas inside the container. The car will be made safe and secure inside the container to be shipped. On reaching Port Kemble in Sydney, the client will be called to open the container. This is because only the client has the keys of the container. This kind of shipping is exclusive to the client. In this no other cargo is loaded so it is more expensive for the client. He is paying for the complete container and there might be a lot of un-used space in it. There are few other things that need to be taken care of. For the shipment process to go ahead the client will also have to give the certificate of title to us. This will help during customs clearing at the Baltimore port for shipping the car over-seas. The certificate will have to be shown when the authorities demand that it is shown. Cube-Container Shipping: This is a relatively less expensive form of car shipping overseas. In this you are shipping the car overseas in high cube containers. This method is not a single car affair. In each container many cars unloaded and loaded. Our company will have to pay no extra money for harboring. So with this new method now and the availability of many containers shipping can be done via mechanical cranes in less than a day. It ends up saving a lot of money for the company. At least 3-4 cars can be loaded per container and shipped through this method. In any remaining space smaller vehicles are loaded. The price of the car would depend on the size. Optimal shipping mode Between the aforementioned ways of shipping, the most feasible one and the lucrative one seems to be the RORO mode i.e. the Roll on and Roll off mode. This method will not just suit the company but is economically more viable. More cars can be sent in one fleet of ships and loading and un-loading will be hassle free. The cars will just have to be driven inside so this seems to be the most appropriate way of shipping. The journey Undertaken: The cars will be shipped from the Baltic-more port in Maryland. They will reach their via the client’s dealers and will be driven till there. The cars which would be Chevrolet Corvair from the States would be loaded via the RORO method on the vessels and will be shipped to Australia. Few things have to be taken care of. We will have to ensure that every imported car has an Import Approval Permit. A 5% duty tax and 10% GST tax would be applied to the vehicle since they are both commercial. The duties and taxes on the car would be tabulated from the Customs value of the vehicle. One customs value has been figured out, you apply the Duty. Since in our case the car is the 1996 Chevrolet Corvair from the States. From the United States perspective, this car has a value of $9000 which amounts to Australia $8000. The cars are over 30 years old so they will be waived of import duty. The general sales tax is 10 % so the payable tax on reaching Australia would be $800. TOTAL RATES would be calculated as following: from Balti-more to Sydney: The total volume weight carried would be 4000 lbs and the cost calculated as following: Freight - 40’ container with rate at $ 3413. Qty = 10 so Total = $ 34,130 Bunk Adjustment Factor (BAF) (80 * 10 = $800) Warfare = $5.25 Bill of Lading = $ 50 GRI Charges = $750 (75*10) High Security Seal charges = $15 Drayage to Loading area (51-100 miles) = $6800 (68*10) Fuel Surcharge = $1564 Custom clearance for Cars = $ 12,250 (245*50) Loading Charges for Cars = $11, 250 (225*50) Customs Brokerage Fees = 0 Allowance for Cars Only = $75 TOTAL = $66,714.25 Lead Times and Risks associated with this shipping: The lead time for the sea-freight from Balti-more to Australia would be 30 days. The ship would leave with the complete cargo in a go. This means the ship would be in transit for around 28 days and around 2 days for taking the cargo by road freight to the ware-houses in Sydney. There are some risks associated with our shipping solution which can’t be ignored. The primary risk is the risk of drowning. This means that in the wake of a dangerous storm or something, the ship stands the risk of being sunk. To mitigate and counter this risk and eventuality, we will have to keep risk transportation measures in the ship. The ship also runs the risk of fire, collusion with another ship and even objects in water. Another type of risk that it faces is the damage risk. In this risk, the ship’s motor boat and engine components stand at the risk of being damaged. Any damage rendered to its component may make the ship unable to operate. The company needs to make sure that it keeps on doing the maintenance and minor repairs of the engines, the equipment and the hull. References: Mollenkopf, Dr Diane and Dapiran, G. Peter, 1999, Best Practice Logistics: How well do Australian/New Zealand Firms Perform?,Paper presented at the Council of Logistics Management Annual Conference, Toronto, Canada, 17–20 October National Office for the Information Economy, 1999, Trucks Online: the National Road Transport Scoping Study, Canberra National Road Transport Commission, Information Bulletin June 2001, ‘Chain of responsibility’ National Transport Planning Taskforce, Building for the Job: A Strategy for Australia’s Transport Network, December 1994, Canberra Nemoto, Toshihori, 1999, Paper on Impacts of Information and Communication Technology on Urban logistics System, Faculty of Commerce & Management, Hitutsubashi University, Japan O’Neil, Denis, 1999, AusCID Infrastructure, The Challenge, Paper to the Regional Australia Summit, 27–29 October, Parliament House, Canberra Peterson J., Cornwell, F. and Pearson, C., 2000, Chain Stocktake of Some Australian Agricultural and Fishing Industries, Bureau of Rural Science, Canberra Pilat, Dirk, 2000, Innovation and Productivity in Services: State of the Art, Paper prepared the OECD/Australia Workshop on Innovation and Productivity in Services, Sydney 31 Oct–3 Nov 2000, Organisation for Economic Cooperation and Development, Directorate for Science, Technology and Industry Primary Business Solutions (2001) Profiting from experience: Achieving competitive advantage through learning networks, Agriculture, Fisheries and Forestry Australia, Building Chains that Win Workshop, Sydney, 28 June Prime Minister, John Howard, Investing for Growth, December 1997 Productivity Commission, March 2001, Position Paper, Review of the National Access Regime, Melbourne Rushton Alan, Oxley John and Croucher Phil, 2000, The Handbook of Logistics and Distribution Management, 2nd Edition, The Institute of Logistics and Transport, Kogan Page Senate Select Committee on the Socio-Economic Consequences of the National Competition Policy, Riding the Waves of Change, February 2000, Canberra Spiers, John,'Freight Transport Logistics Industry Action Agenda' in Shipping Australia, February 2002 Supply Chain Review, Brisbane, Publishing Services Australia, various issues, The Allen Consulting Group, June 2001, Comparative Public Policy on Freight Logistics, Report to the Department of Transport and Regional Services, Canberra UK Department of the Environment, Transport and the Regions, 1999, Sustainable Distribution: A Strategy Victorian Perishables Taskforce, February 2000, ILN Study of Australian Codes of Practice, Guidelines and Quality Systems Applicable to Export Logistics Whitaker, Dr Chris, 2001, Intermodality: Getting it right at the Port of Melbourne, Speech delivered at Intermodal Australia 2001, 26–27 February Read More