Sunday, June 29, 2008

Rosewood Case Study: Discussing Transport Options

Rosewood Case Study: Discussing Transport Options

a) Transport by truck CIP Laredo, Texas

CIP denotes a land based shipment of goods from Canada to Laredo, Texas as well as freight charges and costs for customs clearance from Canada to the USA with only minimum insurance required so this in fact represents one facet of lower costs and risks for Rosewood. If the carriage is limited to one shipping company the risk remains entirely with Rosewood as to liability for damages. However if there are any transfers of carrier the risk is also transferred. CIP Laredo implies there will be a transfer to Monterrey specified by the buyer.

b) Transport by vessel CIF Tampico, transshipped in Miami

CIF denotes minimum insurance coverage paid for by the seller as well as freight charges and costs for customs clearance with the added responsibility of marine insurance charges with transhipments in Miami. The difference in actual costs quotations between CIP Laredo, Texas and CIF Tampico with tran-shipment in Miami will impact choices over lower costs and risks and despite distance factors ocean freight might prove cheaper than road transport freight due to current fuel costs.

For example if Rosewood is located in Montreal then the actual distances between destinations may provide an idea of which transport costs will be higher and thus which insurance costs will be higher.

Montreal to Laredo: 3029 km
Montreal to Miami: 2276 km
Montreal to Tampico: 3399 km

Laredo to Tampico: 616 km
Miami to Tampico: 1828 km

These distance calculations made on absolute distances irrespective of geography raise interesting questions. Cost comparisons might necessarily be made questioning whether CIP Laredo makes sense when Miami appears over 700 km closer. In addition the absolute distance to Tampico from Laredo is only a little over 600 km. Various quotations and possible routings will determine minimum costs and liabilities. At this point CIP Laredo may require comparisons among competitor freight forwarder companies. Montreal to Miami to Tampico appears a great deal longer in terms of absolute distance. However freight volumes may be higher through ocean bound delivery routes and thus costs may in fact be cheaper. Only real time quotations between both freight options will provide the information to determine the best costs and risks minimization.

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Crated and containerized: This would appear the best method of ensuring product quality considering the premium product prices being charged for these furnishings. However it is also the most costly in terms of packing and takes the most freight volume and weight. In the case of a direct to customer delivery this would appear the best method of shipment. Least possible damages to cargo. More expensive than palletized freight.

Palletized and containerized: This would exemplify the most economical freight movement volume and weight considerations requiring minimal additional packing. However upon arrival assembly and instructions will be required as well as perhaps additional costs such as field corporate technicians at assembly point to ensure quality of product delivered. It would appear unlikely that a desk set costing more than the price of an economy car would arrive to the customer in unassembled form. However certain portions such as perhaps table leaves or sectional pull-outs and/or optional additions, pop-outs and do-dads might be best palletized as options and features which a contracted distributor might be required to have on hand depending on Rosewood's marketing or customization strategy.

However the Monterrey shipment represents a delivery similar to pro-forma sample which indicates direct to customer delivery. In the case of delivery to franchisee or distributor palletized and disassembled sets would probably work well. Damages more likely to occur. Less costly than crated products.

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