Transporting a Cargo of Live Abalone to a Chinese Restaurant - Case Study Example

LOGISTICS Name: Institution Affiliation: LOGISTICS INTRODUCTION The report discusses a task by my client to transport a cargo of live abalone about 17 tons from Esperance, Western Australia to a Chinese restaurant in Beijing City, China. The address of the restaurant is No 2 Fucheng Road, Haidian District, Beijing. As a freight forwarder, the transportation of live abalone to me is an interesting endeavor that whenever given the opportunity I won’t think twice. I like this sector of transportation since most of the freight forwarders are afraid of the challenges associated. However, for me, I like it because I have understood all the factors that must be considered when doing such a project to complete it successfully and promptly (Bubner, Harris & Bolton, 2009). Therefore, I will agree to transport my client’s 17 tons of live abalone to the stated Chinese restaurant. Nevertheless, it is imperative to note that there are some crucial factors that I must consider and take care of them during the preparation and the real transportation. One of the most crucial factors worth noting is that the transportation of live abalone cargo is practical, and challenging in various aspects. However, despite the many problems the project very profitable when all the things are carried out as expected. Another crucial point to note is that there is a substantial growth in the demand of live abalone across the globe (Van Der Horst, & De Langen, 2008). This is facilitated by various reasons that are worth mentioning. The first reason is that there is an increased number of restaurants across the globe. These restaurants require enough supply of these products to meet the needs of their customers. the second reason is that there is an increased population across the globe which substantially increases the number of clients in restaurants that demand these food products (Paul, 2003). Therefore, as a freight forwarder transporting the 17 tons of live abalone to the Chinese Restaurant in Beijing city plays a vital role in my logistics business. One of the first achievement associated with this project is that it is one way of accessing the lucrative market. Chinese are the favorites importers of these products and deliver the best to my client will be one way of building my reputation in this transportation sector. Thus, I must ensure that my client is satisfied by all means possible (Fotedar & Evans, 2011). STEP-BY-STEP HOW I INTEND TO DO THIS One of the most crucial issues to consider as I prepare to do this is to understand my role as a freight forwarder. One the key responsibilities in my capacity are to provide the requested service to my client in the transportation of the live abalone cargo to China. The mode of transportation is vital, but the size of the products which is 17 tons will be essential in the decision-making process (APEC Fisheries Working Group, 1999). In essence, there are four types of mode of transport in this case namely road, rail, air, and sea. As such, I will have to consider various factors, carry out effective logistics and come up with the best mode of transportation to ensure that the goods arrive at the Chinese restaurant in Beijing city accordingly (Ragg & Watts, 2015). In addition to the above, I have to carefully arrange the transportation details with the primary objective of ensuring that the live abalone arrive at the restaurant in a timely manner and a good condition. One of my key duties is to research on the shipping prices with the main objective of being conversant and informed of the prevailing prices. For instance, I have to conduct a study to ensure that I know the prices all the way from the source of the products to the Chinese restaurant per ton. Thus, I will be in a position to calculate the cost of shipping the 17 tons of the live abalone. This calculations and information will be vital in my pricing to the client to ensure that I generate profit from the transportation business (Ragg & Watts, 2015). There are associated implications if I fail to carry out the research on the shipping prices. one of the most common implication is that I may conduct the transportation business but in the process make huge losses. As such, the products may not arrive at the destination in the right time and a good condition. The other issue that is vital during the preparation is conducting research on the routes to the destination. I have the address of the Chinese restaurant in Beijing city as No 2 Fucheng Road, Haidian District, Beijing. As such, I must research and analyze effectively on the possible routes to the above destination. Another crucial issue during the preparation is to arrange the cargo space to ensure that the best place is booked with the aim of facilitating faster transport (Woll, Larssen, & Fossen, 2010). The other vital issue during the preparation process is the choice of the mode of transport. The destination, the products, and the size are the vital considerations during this decision making. the destination is a Chinese restaurant in Beijing China which is a clear indication that it is a location that is far. The products to be transported are live abalone a clear indication that these are perishable products that need to be shipped faster and in good condition. Finally, the size of the products is 17 tons meaning that these are not light products, and a heavy cargo carrier is necessary to be used. Considering these factors, the best mode of transport is air since it is fast and the live abalone which is considered as perishable products will arrive at the destination promptly. In addition to the above, there are other conditions such as temperature that must be regulated during the transportation process. Larssen and Fossen assert that “Live and fresh fish and seafood are extremely dependent on the transit environment to maintain their optimum selling condition and avoid mortality” (Woll, Larssen, & Fossen, 2010). This is a crucial suggestion that the conditions must be maintained with the objective of avoiding mortality and maintaining the optimum selling conditions to avoid losses. RISKS TO THE EXPORTER There are several risks or challenges that are faced by the exporter of the live abalone. One of the most significant categories of challenges concerns shipping of these products. One of these challenges is the convenience of budget pricing. The transportation of the live abalone from the source to the Chinese restaurant in Beijing City involves a lot of budget pricing. This budget pricing includes the price of the routes, operational costs, transportation costs, and the regulatory costs. The main purpose of the budget pricing is to ensure that the transportation process is profitable (Bubner, Harris & Bolton, 2009). In such a case, it is very risky is the budget pricing is not conducted in a proper and accurate manner. The second challenge during the shipping of these products is that the products to be delivered should be of high quality. It is profound to note that there has been an increase in the demand for these products, especially in the Chinese market. As such, providing quality live abalone is one of the risks or challenges that is faced by the exporter (Woll, Larssen, & Fossen, 2010). In essence, the quality of these products is measured by their freshness on arrival at the restaurant. This is because customers will expect that they are served with fresh products always for the sake of health, taste, and related issues. Thus it is so challenging to maintain the conditions at the optimum level to avoid issues with compromising quality. The third risk that is faced by the exporter is that live abalone is perishable. As such, it is profound to note that delivering the perishable products to the market demand a high need for expedited transport. Wingerter at al., assert that “Owing to refinements in logistics services and shipping technologies, live seafood is fast becoming an important commodity for both domestic and international markets” (Wingerter at al., 2013). The risk faced by the exporter is the choice of the best mode of transport. The most crucial challenge occurs when the destination is inaccessible by the various modes of fast transport such as air. In this case, I chose air transport as the means to deliver these products to the destination. However, there are various challenges that can arise during the transportation. One of the key challenges is weather conditions that can lead to invisibility during the air transport. If such a situation occurs, the delivery time can be substantially delayed leading to the compromise of the quality of the perishable products. Therefore, it is imperative to put into consideration such factors as weather conditions when planning the transportation of such cargo. This will play an elemental role in ensuring that the products are delivered at the restaurant in the right time and when the quality or freshness is maintained at the possible optimum level (Fotedar & Evans, 2011). The other risk is that priority cargo transport, in this case, the transport of live abalone is expensive. This is the primary reason some of the perishable products are not exported since the cost of shipment is not justifiable by the cost in which they are sold in the market. An example of such products in the market are the crayfish. Thus, the risk that is faced by the exporter is that they must ensure that they offset the transportation costs by the cost of the product in the market. As such, there is a special need to carry out effective pricing to ensure that losses are avoided in all manner possible. Thus, if the exporter is not careful in pricing and consideration of other factors the whole process can end up being non-profitable at all (Ragg & Watts, 2015). The fifth risk faced by the exporter is that transportation of the live abalone for the long distance is invariably stressful since the products are perishable. Several factors stimulate the stress associated with such products from the time it is harvested to the time they are consumed in the market. One of the key challenges involves its shelf live or rather the resistance to physiological collapse. The resistance to psychological collapse substantially falls as the rate of these stressors increases with time. Wingerter at al., assert that “Stress can lead to significant quality defects, which ultimately reduce market value” (Wingerter at al., 2013). This means that this call leads to various defects in quality which end up in reducing their market value. When the market value reduces, the exporter is bound to making huge losses since nobody will purchase substandard products. This means that there are two things that the exporters must be careful with during this process. The first issue is that the exporter must ensure that all the strategies are put in place to ensure that product loss due to mortality is minimized as much as possible. Secondly, the exporter must ensure that the degradation of the product that can arise during the shipment process is reduced by all means possible (Ragg & Watts, 2015). The other vital challenge during the shipment process is the maintenance of the optimal conditions. Perishable products such as live abalone require that optimal conditions to enhance their quality are ensured by all means possible. This means that the challenge arises when these conditions are not well maintained. This is because failure to do this, the products will not arrive the market in the optimal selling conditions that are expected. As such, this can end being a vital source of losses that are a risk to the exporter (Fitzgerald, 2002). Finally, the exporter is faced with two crucial challenges during the shipment, and this includes handling and shipping of the products. Several conditions must be taken cared of during handling process. Some of the most common of these challenges revolve around purging, disinfecting, cleaning, and sorting of the products. These procedures must be carried out in a manner that all these activities do not affect the quality of the products (Van Der Horst & De Langen, 2008). During the shipping process, there is a substantial need to ensure that the set conditions are maintained to avoid changes that can adversely affect the product quality. In essence, maintaining a stable transit environment is vital to the successful shipping (Ragg & Watts, 2015). THINGS THE IMPORTER NEEDS TO DO There are various things that the importer is expected to do. One of the most crucial things is that the importer needs to check whether the optimal selling conditions of the products was maintained during the shipment. In such a case, the importer will have to check mainly on issues such as packaging. In packaging, he or she has to confirm whether the exporter used the right procedures in packaging such as availing the moisture, insulation, refrigeration, and provision of oxygen. In addition to the above, the importer must check the time taken to ship the products from the time it was harvested and shipped. This will be vital to ensure that there were no delays that can lead to the compromising of the product quality (Leung, Cheung & Van Hai, 2000). The importer as well many checks on the freshness of the live abalone with the primary objective of ensuring that quality is optimum. PAYMENT One of the crucial documents in the payment is the commercial invoice. This is essentially the bill of goods from the seller to the buyer. One of the crucial uses of this payment document is that the government uses it in the determination of the true value of the products mainly for the assessment of the customs duties. As well, these payment documents are used to control imports. Thus, the document should indicate vital information such as the address of the shipper and seller, payment terms, delivery, description of goods among other things. Finally, this document is vital for the buyer in proving ownership and arranging payment (Preto at al., 2009). INSURANCE The insurance is subject to the seller. In any case that the seller provides the insurance the insurance certificate will state the specific type and the amount of coverage. When the seller is quoting the cost, insurance, and freight, this is comprehended that he or she is providing coverage for the transportation from the time it leaves the source to the time it lands at the destination and for this case is the Chinese restaurant in Beijing and the time the buyer accepts (Prater, Biehl, & Smith, 2001). INCOTERM There different rules and regulations that govern the exportation and importation of products. One of the most crucial documents in incoterm is the shippers export declaration. This document is used in controlling exports and is a crucial source of export statistics for some countries. The main purpose of the document is to show the proper authorization of the export. As such, it always contains specific information concerning the shipment. This information includes net and gross weights, value, description of the products, shipper’s name, consignee name and other crucial information (Carbone & Stone, 2005). CONTRACT The contact bids the seller and the buyer in one way or another. One of the most crucial aspects of the contract is to govern the shipment and the delivery of the products. For this case, the contracts will ensure that I transport the cargo of live abalone to the specified Chinese restaurant in Beijing. In addition to the above, the required conditions for optimal selling must also be maintained (Preto at al., 2009). Once the shipment is successful, and the buyer has received the products with all the documentation then the contracted is terminated once the buyer makes the payment accordingly. PACKAGING There some crucial factors that must be considered when packaging the live abalone to maintain its quality for optimum selling conditions. One of the most crucial factors of consideration is moisture. The live abalone require a constant source of moisture to ensure that their grills are functional and wet. To achieve successful moisture during the shipment, an absorbent pad soaked with sea water is placed in the packing boxes. The other crucial factor of consideration during packaging is refrigeration of the product (Leung, Cheung & Van Hai, 2000). Refrigeration is mainly kept to ensure that the optimal holding temperature is maintained. In addition to the above, oxygen is another crucial element during packaging. It plays a vital role in increase the longevity of the perishable products shelf life which is crucial in the shipment. FCL/LCL FCL and LCL are common terms that are used in the export and import industry. FCL means full container load and LCL means less container load. Full Container Load is booked when the exporter has goods that can be accommodated in one full container load. In such a case, one shipper owns the said load or cargo. On the other hand, in the least cargo load, the shipper consolidates his products together with other shippers (Barrento, Pedro & Nunes, 2008). CUSTOMS CLEARANCE It is the obligation of the seller to ensure that the agent or the buyer has all the accurate flight details before the live abalone is in air. As such, it is recommended that a copy of the documents is mailed to the agent or through fax on time this is before the product lands at the destination. This will play a crucial role in ensuring that customs clearance is conducted promptly to avoid delays that can be of negative effect on the product quality. There are several implications of faxing the documentations to the buyer on time. firstly, it plays a crucial role in providing the necessary information to clear customs and accept the shipment. In addition to the above, it will be essential in avoidance of delays that may arise due to the missing documents (Fitzgerald, 2002). DOCUMENTS REQUIRED TO PICK UP THE SHIPMENT FROM THE CHINESE PORTS It is imperative to note that most of this kind of exports move on paper. This is the main reason most of the costly delays when dealing with this product is caused by missing papers or inadequate documentation. It that connection, it is crucial that the exporter checks with the buyer that most current air cargo customs requirement and packaging regulations are understood. One of the most crucial document is the airway bill (Carbone & Stone, 2005). This is a receipt for the cargo and the contract for transportation mainly between the air cargo carrier and the shipper. This document indicates the condition of the product and also is evidence that shipment has been made and hence a receipt (Terchunian, Kunz, & O’Dierno, 1999). The other document is the certificate of origin which is used to assure the buying country the country that produced the goods. Other documentation includes a commercial invoice, sanitary inspection certificate, shippers export declaration, and insurance certificate. References APEC Fisheries Working Group. (1999). Air Shipment of Live and Fresh Fish and Seafood Guidelines. A manual on preparing, packaging and packing live and fresh fish & seafood air shipments along with customs and inspection guidelines for six apec member economies, 126. Barrento, S., Marques, A., Pedro, S., Vaz-Pires, P., & Nunes, M. L. (2008). 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