Explain key concepts and issues in international transport and logistics management

Introduction

The purpose of this narrative is to understand the various concerts and issues that are relevant to international transport and logistics management. For the purpose of this research, the company Samsung Electronics has been chosen in order to understand the various intricacies of international transportation and how it affects business logistics.  The paper will attempt to analyze the key concepts and current issues of transport and logistics in the organization. It will critically evaluate the tools of techniques and analyze the benefits of having an effective logistic management system in the organization. The underlying operational and economic characteristics of different modes of transport will be explained. The various effects of international tariffs and safety regulations are to be analyzed and costumes procedures will be evaluated in order to successfully conclude the research on how transport and logistics impact a multinational organization.

Key Concepts And Issues In International Transport And Logistics Management

Current Issues In International Transport And Logistics And Their Effects

Logistics is relevant when it comes to moving materials from suppliers to buyers, moving work-in-progress materials from inside a firm, moving the finished goods to the consumer, and storing these items properly when in transport through international supply chains. Transportation of goods is one of the most essential aspects of running as the goods that are manufactured hold no value until they can be moved to the customer usage areas. Samsung being a manufacturing multinational that operates in several countries throughout the world need to have a strong grip on their transportation management logistics in order to efficiently handle their massive workload and maintain their position as a market leader in innovation and efficiency.

Samsung being a multinational company performs operations all over the world. Many of their products consist of several integral parts that are often manufactured by several outsourced subsidiaries (Cossu, 2016). These components need to be efficiently transported to the assembly line in order to maintain the overall efficiency of the company. More often than not these components are extremely delicate and need special attention and equipment for proper storage during transportation. Thus it's essential that Samsung creates and maintains an extremely efficient transportation management system.

Samsung is a South Korean multinational conglomerate that operates out of Samsung Town, Seoul. The company is the largest conglomerate in South Korea. The group has a diverse portfolio including areas that include food processing, textiles, insurance, securities and retail. Since 1990 the company has increasingly globalised its operations in the electronics market including and in particular mobiles and semiconductors, which have the company's most important sector of the business (Centobelli, Cerchione and Esposito, 2020). Being a global gian the company faces its significant share of challenges when it ces to transporting and maintaining logistics of their materials and products that are continuously on the move. maintaining an efficient supply chain with proper focus on the transportation and logistics aspect of the company's critically important.

Tools And Techniques Used To Analyse International Transport Operations

The various transport and logistics tools that help in efficiently running a supply chain involve various tools and techniques that help the company evaluate on what might be the best option for transporting and maintaining the most effective logistics for the company. The different tolls analyse various factors related to transport and logistics and project the best possible scenario that will abdicate or justify the various choices made for various selection processes. A clear distinction needs to be maintained between policy and planning as the former usually relates to objectives and goals while the later is based on concrete actions.

Planning transportation usually involves addressing specific problems or larger transport concerns at a local or international level. At a local level; the planning aspect is left in the realm of the public sector although the company Samsum being a multinational private sector company owns and operates various transportation assets. For a long time this planning was dominated by engineers and has a distinct mechanised character. The planning process had four major steps that included standard approach; trip generation, trip distribution, modal split, and route selection (Monios, and Bergqvist, 2017). The tools used in these techniques involved the use of mathematical models like regression analysis, entropy maximisation models and critical path analysis.

Private ownership of transport infrastructure changed the situation as port terminals, airports, highways, inland ports, or logistics zones began to be owned privately in large numbers.  Companies like Samsung use private capital in order to build and maintain such infrastructure and thus begin sharing their own international and domestic transport policies and planning. Samsung manages and carries out various operations in privately owned terminals all over the world. They are also active operators under concession agreements with various governments for the use of various publicly owned facilities. Such concessions are becoming more and more relevant especially in ports and airports. Such concession holders are conditioned to invest in equipment and infrastructure of such facilities. 

Benefits Of Having An Effective Logistic Management System In An Organisation

As the volume of freights grows the transportation planning procedures will get further complicated. This will create a need for a robust logistics management initiative. Logistics management is a part of the supply change management systems that plan, implement and control the transport and storage of goods, services and other related information thus meeting customer requirements. Fundamentally it is the control of supervision of the movement of goods.

Managing freight logistics properly gives companies various competitive advantages that include company cotrolover incoming freights, optimal levels of inventory, organizing the reverse flow of goods and utilizing freight moves on proper modes of transport.. All of these aspects help companies save cost and increase efficiency.

Many companies, in order to save the cost and hassle of logistics management; look for third party logistics providers for help as these simple concepts of logistics may turn out to be extremely complex operations upon execution. These third party logistics companies have expertise and advanced technology that cuts cost further and improves processes (Garza-Reyes, et al. 2016). Samsung itself owns a spinoff company, Samsung SDS which was the fastest growing global logistics provider in 2016. The company reported a one year revenue growth of 26.9%. More than 90% of business of samsung SDS originates within its parent company, Samsung electronics. It also handles the logistics for 400 other beneficial cargo owners. The company controls all the aspects of the company's transport and logistics needs. It handles the various pruvalety and jointly owned terminals and ports. The company handles its storage needs by mostly outsourcing but also owns several other storehouses.

The Advantages And Disadvantage Of The Different Modes Of Transportation

Different Modes Of Transport And Their Underlying Operational And Economic Characteristics.

Modes of transport are of particular importance when it comes to planning logistics and transportation since they are the means of supporting mobility for an organisation. Based on the medium that they exploit, modes of transportation can be broadly classified into 3 categories, ; land, water and air. Each of these modes of their own specific features and requirements and adapt to serve specific purposes and demands of the supply chain. In recent times Samsung has initiated a trend of integrating the different modes through intermodality and has linked the different models more closely to production activities.

Road transportation and infrastructure are the largest consumers of space and have the lowest constraints among other transportation modes. Road transportations average operational flexibility as several purposes can be served by vehicles but they will not be able to operate outside roads. This mode of transportation has high maintenance cost and requires containerization (Yanovsky, et al. 2019). They are mainly used for light industries and freight distribution that need rapid movements in small batches. Rail transportation and pipelines are composed of straight paths to which wheeled vehicles are bounded. They have average physical contrast and the requireme is low gradient especially when it comes to freight.  Traditionally heavy industries are linked to this particular system as they have by far the most load bearing capacity. Containerization in his case has improved over time as roads and maritime modes are being linked together. Pipelines can be used only for the purpose of moving liquid but they have practically unlimited routes as they can be laid both underground and underwater.

Maritime transportation can be considered as the most effective mode of transportation with physical properties such as buoyancy and limited friction. The main routes for this mode of transport are seas, oceans, lakes, rivers and channels. They have hgh terminal costs and are mainly linked to heavy industries. With the advent of better containerization maritime shipping has become the linchpin to globalization by allowing the trade and transport of a wide range of goods and commodities. Air transportation has practically unlimited routes but has multidimensional constraints including site, climate and aerial currents. Air transportation activities are linked to tertiary and quaternary sectors and lean on long distance mobility of people. Samsung as a global megacorporation uses intermodal transportation systems that are largely dependent on combining the different modes of transport to yield the most efficient output.

Advantages And Disadvantage Of The Different Modes Of Transportation

 

Mode

Advantages

Disadvantages

Road

  • Lowest level of physical constraints among all modes of transportation

  • Vehicles can serve several purposes

  • Rapid movements in small batches

 

  • High physiographic constraints including construction of roads and other infrastructure.

  • Substantial additional csts n oder to overcome riversor rugged terrain

  • Unable to operate outside roads with high maintenance costs for both infrastructure and vehicles.

Railways and pipeline

  • Ability to load and unload more goods and services than any other mode

  • More frequency of delivery kg goods and services

  • No effect of climatic conditions

  • Easy movement of the vehicles due to non existent traffic and congestion.

 

  • More capital and initial investment

  • High usage of material and significantly high fuel consumption

  • Limited movement as trains can only move over designated railways.

Maritime

  • The economical mde for transporting heavy cargo

  • Safest mode of transportation that provides convenience and has the lowest number of accidents.

  • Cost of construction and maintenance is significantly low.

  • Provides international transport.

  • High dependent on favourable weather condition

  • Requires large initial and regular smaller investment

  • Low speed. Takes a high amount of time to reach one point from another.

Air

  • Highest speeds

  • Can deliver goods and services to the remotest places

  • Highest reliability

  • Highest cost for transportation

  • Weather conditions have adverse effects on the flights

  • Material and fuel consumption is the highest among other forms of transport.

 

The Underlying Operations And Cost Of The Different Modes Of Transportation

The main requirement of transport systems and their ultimate and continuous objective is to reduce cost while increasing the capacity of their vehicles and infrastructure. The costs of different aspects of the transportation system including supplies, systems, distribution systems, tariffs, location, salaries, fuel and marketing costs are in constant change. Other costs include gathering of information, enforcing contracts and transactions and negotiating. These are also referred to as the cost of doing business. Trade also involves transaction costs that account for a growing share of resource consumption in the economy.

Frequently corporations like samsung have a decision to make regarding the route that needs to be followed for the transportation of their goods. Transport costs amount to 10% of the total cost of production. Mobility is influenced by transport cost. Technological changes have caused a rapid decline in transport costs though there is less emphasis on this in the heavy industry. The standard notion of transport costs is shifting to logistics cost. The different costs include terminal costs which are related to the loading, unloading and transshipment, line haul costs that are the function of distance over the unit of freight that is carried and capital costs that are required to apply physical assets for the purposes of transportation.

Factors Affecting The Decision In The Selection Of The Preferred Modes Of Transport

Different factors need to be considered when planning and choosing the mode of transport for a particular shipment. They include physiological, climatic, urgency and different international laws that need to be considered when planning shipments. Each of the modes of transport have key commercial and operational disadvantages. But contemporary demand influences the need for an integrated transportation system that uses multifaceted modes of transport to ship goods at the lowest possible costs and highest possible efficiency.

Factors include different geographical markets which require an interconnection commonly known as the gateway where transfer is possible from nemode to another. Different transportation markets often indicate a leave of complementarity (Bogoviz, et al. 2016). There may be significant cooperation or competition between the different modes of transport and their industry. Differences in the level of service also influence choosing the mode of transport as they often go by price/performance profiles that lead to the lowest variable cost of transportation. The terminal cost structure of each mode is critical and imposes a fixed cost.

Regulation, Tariffs And Safety In International Transport

Nature Of Regulation, Tariffs And Safety In International Transport And Logistics

International trade being the backbone of economic development is completely dependent on effective transportation options for their industry to function. Proper transportation is the only possible way of exposing new technology and products from one country to another. But every country abides by different laws and international trade law is too complex for the market to regulate ona per country basis and thus the governments play an important role in the import and export of goods. Tariff rates are critical to understanding the role of government in these situations.

In the process of shipping the seller is usually the shipper or exporter and in international since the price may vary greatly between countries inkling the same goods it is necessary that countries impose tariffs in order to maintain balance in the competition. Though every country has tens of thousands of transportation vendors it's usually the government that regulates the country's international trade. Tariff rates influence the type of mode that will be used. Some countries have cheaper tariff rates for Air transportation while more expensive tariffs for maritime. This will make a company like Samsung decide the most fa=easible mode when operating and doing business with that particular country.

There is also the continuous change of public policy to democratic nations that have a change in administration every few years. This makes the rate of tariffs and duties extremely volatile. Thus when calculating costs and factoring in different tariffs and duties, making projections is extremely precarious. Thus the process needs to be continuous as the current most feasible mode of transportation may be outdated in the shortest amount of time. This is the biggest factor that affects the transportation and logistics industry when it comes to tariffs and duties. The uncertainty makes it difficult to project and plan future operations.

Effect Of Tariffs And Duties On Transport and Prices Of Goods

The electronics industry is largely based on international outsourcing for the manufacturing of various components that are to be assembled at one specific location. Thus for a company like Samsung international transportation tariffs play a huge role in the price of their finished products. Specific tariffs are placed in various countries to protect domestic producers during recession (Odyek, 2020). During such instances the price of cheap imports are raised which in turn discourages the consumption of such goods in local markets. These Taxes decrease the demand and thus influx needs it be adjusted before the goods are to be shipped. Shipping tariffs also affect the innovation and variety of products that are available to the consumer at any particular int in time. More heavy tariffs will imply that a reduced number of options for products will be shipped and thus creating a void in the market and limiting the choice of the consumer.

Since transportation costs account for 10% of the total costs of production it is important for a company to minimise this cost as it will affect a large chunk of the company’s profit. Thus the company will prioritize products that will yield more value in a high tariff region. This means that the market might get ustaurated as a result of high tariff duties.

Regulations are another factor that affect the cost of rice. Often countries that have higher trade deficits will encourage international goods but regulate the price of such goods to maintain balance amongst local competition. This also implies that companies will lose control over the price of their products in that particular region as the government can impose whatever costs that they feel like will maintain a healthy competition in their local market.

Health And Safety Procedures Adopted By The Transport Service Sector

Health and safety plays a big role in the transportation industry as there are a variety of factors that influence this aspect of the business. The different modes require attention to different safety needs as they vary greatly in their mode of operations. For example air transportation requires a much higher safety planning that road. Effective occupational health and safety can only be implemented if the company and its workforce cooperate to develop policies and systems that eliminate rocks and elevate safety standards (Behdani, et al. 2020). Some specific elements of this general duty requires the employer to employ things like provide and maintain systems of work, arrange safety systems, provide a safe work environment both at the terminals and while in transit and provide employees with the necessary training information and supervision. Employees have the obligation of taking reasonable care of their own safety and cooperating with the employer when framing policies for safety standards.

The chain of responsibility is one of the biggest factors that affect the safety standards of any transportation company. The different activities carry different responsibilities regarding safety. They include consigning in which the employee is responsible for commissioning the carrying of goods, paking where they are responsible for properly placing goods in packages, loading, which involves placing and restraining the load on a vehicle, driving, operating and receiving. These different segments of the transportation industry have different safety needs and should be designated accordingly.

Taking the various factors into consideration, safe work practices should address the following areas.

  • The design of transport vehicles should comply with safety guidelines and provide features such as multiple exits, ergonomic layout, ride and level of noise

  • Safe operation of machinery and powered mobile plant and prevention of fatigue

  • Issues regarding working at height

  • Safe handling of raw materials including considerations for weight bearing tanks,use of mechanical tools and shape and size of loads

  • Appropriate reporting lines and hazard planning.

  • Adequate supply of protective equipment

  • Implementing effective emergency procedures

  • Appropriate documentation of vehicles and plant machinery

  • Safe interface of machineries including forklifts and other hazardous machinery that are prone to accidents.

Freight Costs And Relevant Trade And Customs Procedures

Freight Costs And Pricing And Relevant Trade And Customs Procedures

International freight operations are exposed to costumes and trade procedures at every port. Trade and customs operations appear at least twice in a typical international freight movement- once in the country of export and once in the country of export. Further procedures might be applicable when in transit. Without the proper clearances for authorities the journey of the oods may completely stopped. Thus ports and border control authority are an integral part of the global logistics operations. Appropriate expertise is required to ensure compliance and are often overlooked by companies at certain stages. This causes inefficiency and goods often do not reach the destination. Good compliance and a commitment from the policy makers to give proper direction to the trade facilitation of any country is necessary in order to reduce the impact of trade and customs in international freight operation.

Samsung being a global giant in the tech market requires handling various such trade and customs procedures all over the world. They implement services like 24 hour monitoring, dashboard alerts and active risk monitoring inorder to assess situations as fast as possible. They use separate agencies to monitor the changes in trade and customs policies of different countries that they operate in, in order to effectively recommend and support their logistics division (Kravtsiv, Kolodiichuk and Kolodiichuk, 2018). Since they are the owner of their own logistics company they have special control over the day to day operations and handle freight operations in real time.

The Relationship Between Freight Cost To The Price Of Transported Products

The same goods transported to different regions of the world may differ greatly in price since the customs and trade practices may vary from region to region. Thus the goods transported are also prone to volatile prices. Maintaining infrastructure that are privately owned by transportation companies is complex because of such policies. This indirectly affects the price of the goods that are transported. Some nations may not allow privately owned infrastructure like docks and ports in which case the organisation will have to negotiate with the government in order to come to mutually beneficial cstms and trade policies.

Samsung being a global electronics giat utilises such opportunities to keep the price of their gods as low as possible and gain competitive advantage. Samsung approaches the different problems related to customs and trade simultaneously in order to increase efficiency. Though this raises the operational costs significantly they prevent delays and improve efficiency of the whole supply chain. If businesses fail to be mindful of the regulatory requirements for ports and borders consequences are dire. In addition to delys there may be fines and if the breaches are found to be deliberate there may be custodial sentences. Thus managing transportation and logistics properly helps reduce costs, mitigate risks and safeguard a company like Samsung's good reputation. They also underpin widely strategic capabilities that rely on fast track port and border clearance.

Customs Procedures In The Import And Export Of Goods

Before imported goods are cleared for warehousing or retail sale they require to be compliant to the prescribed customs clearance formalities. These formalities include the bill of entry containing details of the shipment such as value, description of the goods, quantity, exception notification, etc. and customs tariff heading. The verification of the bill of entry is done by the proper officer of customs and if discrepancies are detected they may be reassessed. Import decorations are often scrutinised without prior examination of the goods and . the goods are checked at the time of clearance and valuations and other aspects are also verified. In case there are no discrepancies an out of charge order is issued and the goods are cleared thereafter.

The customs clearance for goods that are exported are similar as they also have to present a shipping bill that will contain the details of the shipment. These documents are verified by a customs officer of the port from which the goods are being exported and in case no mistakes are bound an order of let export is given to the shipping bill (Kozlov, et al. 2019). Samsung operating in several ports and borders for decades understands the different requirements of customs verification and adheres strictly to the policies in order to efficiently import and export products and services. They employ special personnel who are in charge of developing and verifying all the required paperwork and will hold them responsible in case of discrepancies. The assessment for different duties are made by designated bodies within the organisation. Recommendations are made based on the assessment and instructions are handed down the lie on how to best maneuver difficulties when they arise.

Conclusion

Samsung is a south korean multinational conglomerate that primarily deals with electronic devices and operates throughout the globe. It is one of the largest conglomerates in the world and thus has extensive transportation and logistics requirements. This paper analyses the various  key concepts and issues in international transport and logistics management. The different modes of transportation and their underlying economic and operational characteristics have been analysed to understand intermodal transportation requirements. The various advantages and disadvantages of these modes have been pointed out. Nature of tariffs and regulation have been discussed in detail and their effects on the organisation have been enumerated on. Relevant freight costs regarding customs and trade duties have been discussed in order to evaluate the relationship between the two entities.. Thus concluding that Samsung being a global conglomerate is critically dependent on logistics and has a firm grasp on the situation.

 

 

References

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Centobelli, P., Cerchione, R. and Esposito, E., 2020. Evaluating environmental sustainability strategies in freight transport and logistics industry. Business Strategy and the Environment, 29(3), pp.1563-1574.

Monios, J. and Bergqvist, R. eds., 2017. Intermodal freight transport and logistics. CRC Press.

Garza-Reyes, J.A., Villarreal, B., Kumar, V. and Molina Ruiz, P., 2016. Lean and green in the transport and logistics sector–a case study of simultaneous deployment. Production Planning & Control, 27(15), pp.1221-1232.

Yanovsky, P., Yanovska, V., Lytvynenko, S., Lytvynenko, L. and Vodchic, O., 2019. Methodical foundations of cargo owners’ transport services logistics management. In MATEC Web of Conferences (Vol. 294, p. 04014). EDP Sciences.

Bogoviz, A.V., Ragulina, Y.V., Lobova, S.V., Zhukov, B.M. and Stepanova, O.M., 2016. Services infrastructure forming in the process of transport logistics stock movement. International Review of Management and Marketing, 6(6S).

Odyek, J., 2020. Logistics undergraduates tipped on logistics and transport industry.

Behdani, B., Wiegmans, B., Roso, V. and Haralambides, H., 2020. Port-hinterland transport and logistics: emerging trends and frontier research.

Kravtsiv, V., Kolodiichuk, V. and Kolodiichuk, I., 2018. The greening of transport and logistics systems of regional agricultural markets. Economic annals-XXI, (171), pp.38-43.

Kozlov, A., Tamer, O., Lapteva, S., Vorobyeva, T. and Shevnina, T., 2019. Organizational and Methodological Approaches in Management to Optimize the System of Transport and Logistics services of Companies Operating in the Arctic.

 

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