Unit- 4

Introduction to international transport system:-

The international transport system refers to the network of transportation infrastructure and services
that enable the movement of people, goods, and services across national borders. This includes
various modes of transportation such as air, sea, road, and rail.

The international transport system plays a crucial role in facilitating global trade, tourism, and
cultural exchange. It enables businesses to connect with customers and suppliers in different parts of
the world, and allows people to travel for work, study, or leisure.

The system is made up of various components, including airports, seaports, highways, railways, and
logistics networks. These components work together to ensure the safe, efficient, and timely
movement of people and goods across borders.

However, the international transport system also faces challenges such as congestion, safety
concerns, and environmental impacts. To address these challenges, governments, industry groups,
and international organizations work together to develop and implement policies and regulations
that promote sustainable and efficient transportation practices.

The essential global logistics terms you need to know to understand the freight forwarding process
and manage an efficient supply chain.

1. Landed Cost:-
Landed cost is the total cost of a product to the point it’s ready to be delivered to your customer.
That includes not only the base cost to purchase your products from your supplier overseas, but also
costs associated with transportation, duties and taxes, insurance, handling fees, etc. Knowing the
landed cost helps you price your product correctly to adequately cover your costs and better
understand profitability.

Working closely with your international freight forwarder helps predict and minimize negative
impacts to your landed cost.

2. Consignee:-
A consignee is the entity that the shipper is sending the goods too. That’s typically you, the importer,
but there are exceptions. (A consignee could be someone that acts in your name, for example.)
Typically, you’ll see consignee along with the word consignor and consignment. The “consignor” is
the shipper of your goods; the “consignment” is the actual goods being shipped.

3. Bill of Lading:-
Two common bills of lading types are the house and master. The house bill of lading (HBL) is a receipt
or contract between you and your NVOCC/freight forwarder. The master bill of lading (MBL) is the
contract between your NVOCC/freight forwarder and the actual carrier.

4. LCL
LCL stands for less than container load. If you ship LCL, your shipment shares the container with
cargo from other importers. Transit time is longer for LCL due to the consolidation and
deconsolidation before and after ocean transit, but is more economical for smaller shipments.
5. FCL
FCL stands for full container load. This means only your cargo occupies the container (rather than
sharing space as is the case in LCL). It’s usually cheaper (from a landed cost perspective) and faster to
ship via FCL and the risk of damages or loss is decreased since your goods aren’t handled as LCLs.

6. Drayage
Drayage is a truck service that moves containers to and from a port. Learn more about the origins of
the word drayage.

7. Incoterms
The term “Incoterms” is short for International Commercial Terms. Specifically, they are trade terms
published by the International Chamber of Commerce (ICC) and are internationally recognized by the
shipping industry. As an importer, incoterms are what you and your supplier use to define
responsibilities and risks in a transaction.

Two common incoterms used by your importers and exporters are Free on Board (FOB) and Cost
Insurance and Freight (CIF). Find out how to choose the right incoterm for your shipments.

8. Steamship Line/Carrier
These two terms are often used interchangeably in ocean freight and refer to the operator of the
vessel itself. When you see an ocean container that says Maersk, Evergreen, OOCL, etc. – those are
names of steamship lines (or ocean carriers).

Large volume importers typically sign contracts directly with steamship lines to take advantage of
their buying power. Smaller and mid-sized shippers typically are best served by freight forwarders to
provide the best mix of competitive rates, value added services, and flexibility.

9. NVOCC
NVOCC stands for non-vessel operating common carrier and is a type of Ocean Transportation
Intermediary (OTI). Although the term NVOCC is often used synonymously with the term freight
forwarder, there are some technical distinctions. NVOCCs act as “virtual” carrier and issues their
own bill of lading. Per Federal Maritime Commission (FMC) requirements, an NVOCC must also
publish and maintain a regulated tariff.

10. Marine Insurance

Marine insurance is insurance for ocean freight. As we discussed in a previous blog, marine insurance
can cover damage or loss to your cargo while in transit. For most commodities, marine insurance is
relatively cost effective and helps mitigate the risk of common losses or even a general average
situation.

11. 3PL
3PL stands for “third party logistics.” A 3PL service provider offers outsourced solutions for a
company’s fulfillment and distribution needs. The term 3PL is relatively broad but often involves
other related transportation, warehousing, IT, and/or supply chain services.
Characteristics and Relations, Significance of Transport Services:-
Characteristics of Modes of Transports- Road transportation, Rail
transportation, Maritime transport, Air transport:-

Road Transportation:

 Flexibility: Road transportation is highly flexible as vehicles can travel to

almost any location that is accessible by road.
 Cost-effective: Road transportation is generally cheaper than other
modes of transportation, especially for short distances.
 Limited capacity: The capacity of road transportation is limited by factors
such as traffic congestion, road conditions, and vehicle size.
 Dependence on weather: Road transportation is affected by weather
conditions such as heavy rain, snowfall, and storms.
 Easy to track: The movement of goods through road transportation can
be easily tracked using GPS systems.
Rail Transportation:

 High capacity: Rail transportation has a high capacity and can transport
large quantities of goods over long distances.
 Cost-effective: Rail transportation can be cost-effective for long-distance
transportation of bulky and heavy goods.
 Limited flexibility: Rail transportation is less flexible than road
transportation as it requires specific infrastructure such as railway tracks
and terminals.
 Dependence on scheduling: Rail transportation is dependent on
schedules and can be affected by delays or disruptions to the network.
  Environmentally friendly: Rail transportation is considered to be a
relatively environmentally friendly mode of transportation due to its
lower carbon emissions.

Maritime Transportation:

 High capacity: Maritime transportation has a very high capacity and can
transport large quantities of goods over long distances.
 Cost-effective: Maritime transportation can be cost-effective for
transportation over very long distances, especially for bulky and heavy
goods.
 Slow speed: Maritime transportation is generally slower than other
modes of transportation due to the speed of ships and potential delays
in ports.
 Dependence on weather: Maritime transportation can be affected by
weather conditions such as storms, high waves, and heavy rain.
 International reach: Maritime transportation has an extensive
international reach and can transport goods between countries and
continents.

Air Transportation:

 Speed: Air transportation is the fastest mode of transportation, allowing

for rapid delivery of goods over long distances.
 High cost: Air transportation is generally the most expensive mode of
transportation, especially for bulky or heavy goods.
 Limited capacity: Air transportation has limited capacity compared to
other modes of transportation, especially for bulky or heavy goods.
 Dependence on weather: Air transportation can be affected by weather
conditions such as storms, turbulence, and heavy rain.
 Global reach: Air transportation has a global reach and can transport
goods between countries and continents quickly.
Technical Performance & Transport Economic Indicators:-
Technical performance indicators are metrics that measure the efficiency and
effectiveness of transportation systems and infrastructure. Some common
technical performance indicators include:

1. Capacity utilization: This measures the percentage of the available

capacity that is being used by a transportation system. For example, the
percentage of seats filled on a plane or the number of vehicles on a road
at peak hours.

2. Travel time: This measures the time it takes for a person or goods to
travel from one point to another. This can be measured in minutes,
hours, or days.

3. Reliability: This measures the consistency of travel times and the ability
of the transportation system to operate according to a schedule. For
example, the percentage offlights that depart and arrive on time or the
frequency of traffic jams on a highway.

Transport economic indicators, on the other hand, are metrics that measure
the economic impact of transportation systems and infrastructure. Some
common transport economic indicators include:

1. Cost of transportation: This measures the cost of transporting people or

goods from one point to another. This can include the cost of fuel, labor,
and maintenance.

2. Accessibility: This measures the ease of accessing transportation systems

and infrastructure. For example, the number of transportation options
available in a given area or the percentage of the population that lives
within a certain distance of public transportation.

3. Economic impact: This measures the economic benefits and costs of

transportation systems and infrastructure. For example, the number of
jobs created by the transportation industry or the amount of economic
activity generated by the movement of goods and people.
Maritime Routing Patterns:-

The Containerization of Commodities:-

Containerization is a system of international freight transport in which shipping
containers are used to transport goods from one place to another.
Containerization is the most unique concept of unitisation (maximum goods
transfer at a one time with minimum cost) & is based on the concept of door to
door technology. Containerization is an important cargo- moving technique
originated many centuries ago but was not well developed or widely applied
until often World War II.

What is containerization?
Containerization refers to the use of containers to move goods using one or
more modes of transport without intermediate restaffing and destaffing.
Unique concept of unitisation based on door to door technology.
 After World War II, containerization method of transportation
considerably reduced the cost of transport, supported the past- war
boom in international trade & was a major element in globalisation
process.
 Containerization method of transport removed the manual sorting of
most shipment & the need for warehousing containerization also
 reduced the need of thousands of duck workers(who used to be needed
previously to handle the weak bulk cargo).

Advantages:-
1. Standardization of container universally acceptance.
2. Flexibility of container for different types of goods.
3. Low transportation cost.
4. Fast transportation, less time and terminal and less costly warehousing.
5. Less chances for damage & loss of cargo.
Disadvantages:-
1. Consumes large space of terminal.
2. Container handling instruments are costly.
3. Arrangements of containers are complex.
4. Repositioning problems with containers.
5. Costly items may be theft.
6. Illegal goods & weapons, prostitution may be.
Transcontinental bridges:-
Transcontinental bridges are bridges that span across a continent or connect
two or more continents. Although there have been various proposals for
transcontinental bridges, currently there are no such bridges in existence.

The idea of a transcontinental bridge has been discussed for several decades,
with some proposals being more realistic than others. One of the most well-
known proposals is the Bering Strait crossing, which would connect Asia and
North America across the Bering Strait. However, this proposal is controversial
due to environmental concerns and high construction costs.

Another proposed transcontinental bridge is the Gibraltar crossing, which

would connect Europe and Africa across the Strait of Gibraltar. While this idea
has been considered feasible from an engineering standpoint, it is also
controversial due to geopolitical issues and concerns over the impact on the
marine ecosystem.

There have also been proposals for a bridge linking Australia and Papua New
Guinea, as well as a bridge between Russia and Alaska. However, these
proposals have not progressed beyond the conceptual stage.
Overall, while the idea of a transcontinental bridge is intriguing, it is not
without significant challenges and obstacles. The high cost of construction,
environmental concerns, and geopolitical issues all make the construction of
such bridges unlikely in the near future.