SESSION 1 : different modes of transportation

2 Exercises to prepare and post on the website of the course before 11:15
or 16:30 or 20:00

Download the exercise from the "exercises to prepare during each session" file, save it on your computer
under your name, for instance: "exercise session 1 Pierre DUPONT". Prepare the exercise on the
document itself. Save again. Go to the "Please Submit here" file, open the correct session, click on
upload, then browse your exercise on your computer, click ok. You can see your submission in the list of
documents. BE CAREFUL, if you save this document under the exercises session 1 name, and post it
under this name on the website, it may be erased and replaced by any other document bearing the same
name.

Exercise1:

Cosmpar company, located in Paris, is specialized in the wholesale of

cosmetics.
Cosmpar sells through distributors who regularly order big quantities of goods.
You are in charge of 2 shipments:
The amount of freight for a shipment to New York and another one to Rio
de Janeiro is respectively :
3636.76 by sea to Rio for 8,000 kg
2050.75 by air to NY for 760 kg
QUESTIONS :
- Why does Cosmepar prefer air freight ?
- Write a letter to the Brazilian customer in order to convince him to choose the
air freight (list the main ideas).
Exercise 2:
L.N. laboratories regularly export medicines from Paris to Bangkok (Thailand).
They use the SCOCs services (freight forwarder), and usually ship the products
on ocean vessels.
Deliveries are regular, and they wonder if air freight would not be more
appropriate for their export shipment.

The total amount of transport charges (including clearance) for each transport
mode (the quantity shipped by air or by sea is different):
Sea : freight 6704.28 >> 1.97/kg
Air : freight 2617.84 >> 3.08 /kg

According to the calculation based on the information below (you do not

have to calculate intermediary costs):

SEA TRANSPORT :
Financial cost + storage for LN = 1319.75 >> 0.45/net kg
Financial + storage cost for the customer = 2618.33 >> 0.77 kg

AIR TRANSPORT :
Financial cost +storage for LN = 133.26 >> 0.16/kg
Financial + storage cost for the customer = 139 >> 0.16/kg

QUESTIONS :
What is the total cost of the delivery by sea and by air per kilo for the customer?
What is the difference between air and sea for L.N.?
What would be the preference of L.N.? Of the customer?
If you work for L.N. and have to convince the customer to choose the mode of
transportation you prefer, what arguments will you use?

For advanced students: how much could you invoice the goods per kilo if
shipped by air?

INFORMATION GIVEN BY THE DIFFERENT CARRIERS just for your

information.
(NB: you do not have to calculate the storage and financial costs based on this
information)
SEA TRANSPORT : Information transmitted by SCOC :
Ocean freight : Transit time : 28 days
Pre carriage : from Paris to FOB : 7 days ;
From FOB to availability of the funds for LN : 16 days (payment by irrevocable
and confirmed LC at sight : see sessions 7 and 8)
Local carriage: from port of Bangkok to Bangkok city premises of the customer:
6 days
AIR TRANSPORT : information transmitted by Air France Cargo
Delivery time from CDG Paris Airport to Bangkok : 2 days (from FOB airport
to Bangkok). 3 flights a week on this destination.
Local carriage from Bangkok airport to the customer warehouse: 1 day.
Funds can be cashed 8 days after delivery to CDG Paris Airport.

Financial aspects :
- Taking into account the frequency of deliveries LN needs to keep an
average stock for Thailand of
20 days of sales for ocean shipments,
5 days of sales for air shipments
Storage charges 1.14/kg/year
Interest rate is 12%
- The Thailand customer needs an average stock of :
60 days of sales for ocean shipment,
15 days of sales for air deliveries,
Storage charges: 54.85 Baht/kg/year
Interest rate 8%
1 costs 44.976 Bahts