1. Lim
Trading, a wholesaler; wishes to send goods regularly to his customers who are
mainly small retailers located in the same city and the surrounding suburbs.
State) with reasons, which mode of transport he would use. The city and the
surrounding suburbs are served with a good system of light rail transport.
Choice
of transport recommended: Road, preferably own lorry
Reasons for choice
(a)
It is convenient because delivery of goods is made right up to a customer's
doorsteps. No unloading or reloading is required, which is necessary if rail
were to be used. There are less chances of pilfering and damage to goods since
the goods are sent by the company's own workers.
(b)
It is flexible as Lim Trading can schedule his time of delivery at a time
convenient to him and his customers. He can get a full load for most trips
since all his customers are in the same city and the surrounding suburbs. This
will ensure that his lorry is used economically. If he were to use rail, he may
have to follow the railway timetable. If he were to used a hired lorry, he
would have to depend on the availability of hauliersi lorries.
(c)
It is more economical than rail delivery since goods are sent short distances,
in small quantities.
2. HKL
Ltd, a factory producing computer disc drives located in Singapore, has found that one of
its machinery has broken down suddenly. As a result, all production has come to
a halt since the spare part has to be specially ordered from the manufacturer
in the UK.
The Production Manager of HKL Ltd has confirmed through the e-mail that the
particular spare part is available. He, however has 2 options as to the choice
of the most suitable form of transport: air or sea cargo. Which one should he
use? Advise him, giving your reasons for your choice.
Choice
of transport recommended: Air cargo
Reasons for choice
(a)
Air transport is much faster than sea transport. As the spare part is needed
urgently, time is of utmost importance. Without the spare part, there can be no
production. If production is affected, it means HKL Ltd may not be able to
fulfil its customers' orders for computer disc drives. This would mean a loss
of customer goodwill, and it would affect its good standing with the affected
customers whose own plans would be adverse affected. This would in turn reduce
HKL future sales.
(b)
In the meantime, HKL Ltd has to pay its workers and other factory overheads
even though production is nil.
(c)
It is true that the cost of freight is much higher for air transport compared
to the cost of freight by sea. However, the above advantages far outweigh the
factor of cost in this instance.
3. Cool
Cut, a diamond cutting factory located in Singapore,
has to import uncut diamonds from Johannesburg,
South Africa.
Suggest a suitable mode of transport, giving reasons for your choice.
Choice of transport recommended: Airline,
possibly personally brought in by the exporter himself or a trusted agent
Reasons for choice
(a)
Diamonds are very expensive, small and light. There is great risk of theft. The
factor of security of such valuable goods is very important. That is why they
may have to be brought in by somebody trustworthy, rather than be sent by air
cargo.
(b)
The factor of speed is also very important. The faster such precious gems reach
its destination, the safer it is. Thus, the choice is air transport since it is
the fastest means of transport.
(c) The factor of cost is secondary although there
is no doubt that the cost of air transport plus the personal travelling
expenses of the courier is very high.
4. Sheik
Farouk, an oil exporter located in Kuwait
wants to send his crude oil to Japan.
Advise him, giving your reasons.
Choice
of transport recommended: Sea transport using oil tanker
Reasons for choice
(a) Crude oil is fluid and heavy,
normally exported in bulk and there is enough to fill one ship. It is not a
perishable item. It is best to use sea transport in special carriers, specially
designed to carry oil even though the journey takes a long time.
(b) Kuwait
and Japan
are very far apart and are separated by huge oceans. So sea transport has to be
used. It is impossible to use rail or road transport.
(c) It is cheaper to send the crude oil by sea and
it is not suitable to use air transport. Crude oil is not sent in small
quantities but in bulk. There would not be enough space in an airplane to carry
all the crude oil. Only items which are light, small and valuable are suitable
to be sent by air transport. On the other hand, crude oil is very heavy.
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