LOGISTICS AND INTERNATIONAL

FREIGHT FORWARDING

Topic 2: Physical Transport Modes and

Intermodal Transport systems
Luu Huyen Trang (PhD), ISEF, Academy of Policy and Development
Email: [email protected]

Reference

Prescribed textbook:
Coyle, J. J., Langley, C. J. & Bardi, E. J. 2003, The Management of Business Logistics: A Supply Chain
Perspective, 7th edn, Thomson Learning, Canada.
Reference textbook:

Bloomberg, D.J., Murray, A. and Hanna, J.B. 1998, The Management of Integrated Logistics: A
Pacific Rim Perspective, 2nd edn, Sprint Print, Prentice-Hall.
Bowersox, D.J. Closs, D.J. and Cooper, M.B. 2002, Supply Chain Logistics Management, McGraw-
Hill/Irwin, New York.
Christopher, M. 1998, Logistics & Supply Chain Management, 2nd edn, Pearson Education. Essex. Cooper, J.
1994, Logistics & Distribution Planning, Kogan Page, London.
Coyle, J.J., Bardi, E.J. and Langley, C.J. 2003, The Management of Business Logistics, West
Publishing Company, New York.
Greasley, A. 2006, Operations Management, John Wiley & Sons Ltd, Chichester, England. Johnson,
J.C. 1999, Contemporary Logistics, Prentice Hall, Upper Saddle River, N.J.
Stock, J.R. and Lambert D.M. 2001, Strategic Logistics Management, 4th Edn, Irwin/McGraw-Hill,
Boston.
Rushton, A., Croucher, P. and Baker, P. 2006, The Handbook of Logistics and distribution
Management, 3 rd edn, Kogan Page, UK.
Lambert, D. M., Stock, J. R. and Ellram, L. M. 1998, Fundamentals of Logistics Management,
McGraw Hill, USA.
List of additional readings:
Chacon-Hurtado, D., Kumar, I., Gkritza, K., Fricker, J. D. and Beaulieu, L. J. 2020, ‘The role of
transportation accessibility in regional economic resilience’, Journal of Transport Geography, Vol. 84, pp.
p.102695-18.

CONTENT

❑The functions of transport

❑The importance of time in transport
❑The transport chain
❑The role of transport in logistics
❑Economic and service characteristics of the modes
of transport
❑Intermodal transport systems and containerization

3
 Some Food for Thought…

“Good roads, canals and navigable rivers, by

diminishing the expense of carriage, put the
remote parts of the country more nearly upon a
level with those in the neighborhood of the town.
They are upon that account, the greatest of all
improvements.”

(Adam Smith 1983, in The Wealth of Nations)

The Functions of Transport

• It is difficult to conceive of a situation where

transport does not play a major role

• Transport exists for the purpose of bridging

spatial gaps that can be expressed not only in
terms of distance but also of time and of cost

• Economic growth is increasingly linked with

transportation improvement and development

The Importance of Time in Transport

• Transport achieves its function better when the

movement is performed quickly
• Thus, there should always be a consideration of
time in any transport investment
– time is largely equated with speed of movement,
– the saving of time (which cuts down costs) is
associated with two other factors or conditions:
• overcoming of certain obstacles or hindrances to movement
• Reducing turn-round time, e.g. avoiding time-consuming
problems such as queuing, slow loading and unloading and
lack of mechanised handling

6
 The Transport Chain

• The transportation of cargo or loads is often an

intermodal affair involving a chain
– Cargo is accepted for transport, carried from a point of
origin to a point of destination and then distributed
• An intermodal or combined transport service entails
the use of more than one mode of transport offered by
a single operator acting as principal.
• Any mode of transport – road, rail, inland waterway,
sea or air – may be involved in a multimodal
transport operation.
• The efficiency of the whole transport journey
depends on each link in the transport chain being
efficient and effective.

The Transport Chain (C)

The Role of Transport in Logistics

• A company’s integrated logistics system can be

conceptualised as being a series of fixed points
located spatially between the buyer and seller
• The role of transport is to facilitate the flow of
goods between these fixed points; the physical
link connecting the firm to its suppliers and
customers
• It also adds value to the product by providing
time and place utility for the firm’s goods
– Value is not created unless products are transported &
delivered to consumers where & when they are
wanted

9
 The Role of Transport in Logistics (C)

• In an integrated logistics system, the choice of

transport service directly impacts on inventory
and storage costs.
• Ex: if a company switches from rail to air
transportation to move finished goods from a
factory to the customer.
– it would incur lower inventory and storage costs
– this advantage will of course be at the expense of
higher transportation costs
– hence, the company has to make the transportation
decision taking into account the total cost or systems
approach.

10

Economic and Service Characteristics of the Modes

of Transport

• Air: very high-value, low-volume, time-sensitive

products
• Truck: moderately high-value, time-sensitive
products including semi-finished & finished
• Rail: low-value products including many raw
materials
• Water: very low-value products moved
domestically; high-value if moved internationally
• Pipeline: generally limited to petroleum products
& natural gas; sometimes minerals (with water)

11

Economic and Service Characteristics of the Modes

of Transport (C)

12
Economic and Service Characteristics of the Modes
of Transport (C)

13

Economic and Service Characteristics of the Modes

of Transport: Rail

• Railroads are primarily long-

distance, large-volume movers
of low value high-density goods,
such as coal, grain, paper, wood
and other bulk products
• They are basically long haulers
of domestic goods
• Most of rail systems in the
world are managed by the
government

14

Economic and Service Characteristics of the Modes

of Transport: Rail (C)

• Accessibility can be a problem

• Transit times are generally long

• Premium intermodal services,

e.g. piggyback, double stacks,
etc.

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Economic and Service Characteristics of the Modes
of Transport: Road (Truck)
• It is the second fastest mode of freight
transportation and have the major advantages of
door-to-door flexibility, ability to meet delivery
schedules.
• Moving freight with smaller average shipment sizes
than rail and offer reasonably fast and dependable
delivery for less-than-truckload (LTL) shipments.
• Primary disadvantages are the high cost of service
and inability to handle all types of freight owing to
highway safety restrictions that limit the dimensions
and weight of shipments.

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Economic and Service Characteristics of the Modes

of Transport: Road (C)
• Used by almost all logistics
systems
• High accessibility
• Transit time is faster than
rail or water
• Reliability can be affected
greatly by weather
• Relatively high cost
compared to rail and water;
trade-off is faster service

17

Economic and Service Characteristics of the Modes

of Transport: Air

• The primary advantage of air

transportation is speed
• Transit times are fastest of the
modes, but rates are highest
• Seek goods with a high value
to weight ratio
• Accessibility is low
• Reliability subject to weather
more than other modes

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Economic and Service Characteristics of the Modes
of Transport: Water
• Ships are the primary mode of international
transport for bulk commodities, general cargo and
containers because of the low per-unit cost structure
and their ability to carry almost any type of product.
• They suffer from several limitations, such as slow
speed, safety and, at times, unreliable delivery
schedules.
• Main costs for ship operators are harbour and dock
dues, and terminal handling costs, which include the
costs for loading and discharging of the goods.
• The cost of water transportation reduces
significantly with distance and size of shipment.

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Economic and Service Characteristics of the Modes

of Transport: Pipeline
• Accessibility is very low
• Cost structure is highly fixed with
low variable costs, e.g. fixed costs
associated with the installation of the
pipelines and pumping equipment, as
well as the construction of terminals
• Therefore, to be competitive with
other modes of transport, they must
work on high volume so as to recover
these high fixed costs
• The costs per ton-mile decreases
substantially with larger pipes,
provided there is adequate cargo

20

Intermodal Transport Service

• The movement or transfer of freight and/or

passengers on two or more transportation
modes
• Handled as one continuous through-shipment
under authority of a single bill of lading/airway
bill
• Goal: Provide that movement in a such a way
which is as seamless and continuous door-to-
door as possible

21
 Intermodal Transport Service (C)

Source: Coyle et al. (2003)

22

Intermodal Transport Service: Advantages

• Advantages:

– “One-stop” shopping
– Less handling
– Applicable to the “systems approach” to doing
business
– Can be more cost efficient to the customer
– Increased safety and security

23

Types of Intermodal Transport Service

• The common intermodal combinations involve rail,

road and water transport
• The standardised ISO container is transferable to all
surface transportation modes with the exception of
the pipeline
• Containerisation offers a door-to-door service
without the necessity of handling goods in the
container at any point
– Reduces theft, damage, multiple handling costs and
intermodal transfer time
– Changes materials handling from labor intensive to
capital intensive

24
 Types of Intermodal Transport Service: Land
Bridge
• A unique type of intermodal service
using containers is the land bridge

• “Land bridge” concept may apply

for international shipments where
oceans are separated by a large land
mass

• For example, containers moving

from Australia to the East Coast of
USA have two options; containers
moving to West Europe also have
two options

25

Types of Intermodal Transport Service: Others

• Trailer-on-Flat-Car (TOFC):
– Trucks ride on rail cars
– Takes advantage of motor
flexibility and rail’s long haul
economic advantage
– “Piggyback”

• Double-stack train

26

Types of Intermodal Transport Service: Design

Requirements

• Standardisation of physical form and

dimensions of cargo units such as pallets,
trailers, containers, etc.
• Provision of effective transfer equipment at
intermodal terminals which allows maximum
direct transfer between transport modes
• Adequate buffer storage capacity to allow for
storage of cargo at intermodal terminals due to
differences among interfacing modal transport
links

27
 Types of Intermodal Transport Service: Design
Requirements (C)
• Provision of effective capacity to minimise
turnaround of modal transport carriers at
intermodal terminals

• Standardisation of cargo and unit load codes,

and recording information

• Coordination of transport service schedules and

operations to achieve as close as possible ‘just in
time’ arrival of shipments

28

Containerisation

• Considered as one of those innovations which has

had a revolutionary effect on transport

• Its development has been so rapid since 1965, and

the effects have been so far-reaching

• If all containers in the world were lined up, it

would have a length of 108,000 km
(www.Maerskline.com)
– This is a third of the way to the moon, equivalent to 18
times the length of the Great Wall or 2.7 times around
the Earth at the Equator

29

Containerisation (C)

• In 1967 an international agreement was

unanimously reached by the International
Standards Organisation (ISO) with respect to
standard sizes of containers

30
 Types
6. What are theofimpacts
Intermodal Transport
of international transportService: Design
on international
trade?
- Expand the number of markets and types of goods in international trade
• Goods structure: high value, small quantity => any kind of goods
• Market mechanism: near, neighbor, favorable markets => any market
- Improve the national balance of payment
• Serving function (use domestic transportation companies => no need to
pay foreign currencies => save foreign currency)
• Trading function (improve export => gain foreign currency)
- Promote the development of international trade “The amount of goods
that circulate between 2 countries is in direct proportion to the product
of economic potentialities of the two countries & is in diverse ratio to
distance between them: Q = P1xP2/L

C7. What is transport right? How to arrange transport rights between seller
and buyer in a sale contract?
Definition: Transport right/liability is the right and obligation of organizing
the carrying process and directly making payment to the carrier.
1. Dividing of transport rights/liability in international sales contracts
a. How to divide:- Incoterms 2010: 2 groups: Group 1: carriage liability
belongs to importers (E, F)/Group 2: carriage liability belongs to
exporters (C, D)
- In 11 terms of Incoterms 2010, there are 4 terms in which goods must be
transported by sea: FAS, FOB, CFR, and CIF. In the rest terms, goods can be
carried by all modes of transport, including sea transport
- Transport responsibility belongs to exporters if they sell goods by CIF,
CFR, DES, DEQ,
- CIP, CPT, DDU, and DDP prices
- Transport responsibility belongs to importers if they buy goods by EXW,
FAS, FOB, FCA prices

Containerisation (C)

• Exporters will get transport responsibility when they sell the goods at the places that are
nearest to consuming sites. And importers will get one when they buy the goods at the
places that are nearest to producing locations.
a. Benefits of getting transport rights/liability in international trade
• Gaining initiative in the carriage of goods, negotiation, and signing of contracts
• Choosing the carriers, routes and methods of carriage (Lựa chọn người chuyên chở,
tuyến đường và phương pháp chuyên chở)
• Utilizing national merchant fleets and other transportation means
• Improving the national balance of payment
• Promoting the development of other sectors: freight forwarding, broker, consolidation…
b. Cases that should not get the transport right/liability
• Assuming that prices in the shipping market sharply increase in comparison with the
time of signing the sales contract.
• Predicting that it will be hard to charter vessels
• Calculating that the difference between the CIF/CFR price (export price) and the FOB
price offered by foreign importers (or the difference between the CIF/CFR (import
price) offered by foreign exporters and the FOB price) is not enough to compensate
freight and/or insurance premium that we have to pay.
• Dividing of transport rights/liability is assigned by international law or practices,

3
 Types of Intermodal Transport Service: Design

Câu 11: What is B/L? Analyze functions of B/L?

Definition: B/L is the main document used in international maritime

transport. It is issued by a carrier or representative of the carrier after cargo
is shipped on board or received for shipment.
The representative might be an agent, the Master. Carrier takes
responsibility for damage/ shortage of cargo during transportation (trong
luật chỉ nhắc đến liability of carrier chứ k nhắc đến representative)
-> cả 2 ng này đều có thể ký vận đơn nhưng mà khi có tổn thất thì
responsibility sẽ là do carrier chịu mặc dù Master kí as a representative
Người cấp vận đơn: là người có phương tiện chuyên chở, người kinh doanh
phương tiện chuyên chở, người được người có phương tiện chuyên chở ủy
quyền
Thời điểm cấp vận đơn:
+ Sau khi hàng hóa được xếp lên tàu
+ Sau khi nhận hàng để xếp
Người được cấp phát vận đơn: người gửi hàng

Reference

Function: 1) Evidence of the contract of carriage:

Why is B/L only the evidence of the contract, not the contract? It is not a
contract because there is only one party that is the carrier signing in →
Regarding the format, it is not eligible to become a contract. But it is
evidence because according to the order of liner shipping, in the third
step, there is a negotiation between the two parties, and the result is then
reported back to the consignor (nguoi gui hang), who will send the goods
to the carrier and receive the bill of lading. Thus, if there is a bill of
lading, there is an implicit agreement between the two parties. In addition,
there is a document that is a booking note, which proves that the
consignor wishes to negotiate with the carrier
2) Confirmation of shipment
Since the bill of lading is issued after the carrier receives the goods, it is
proof that the goods have been received. The bill of lading is also proof
of the quantity, volume, and external condition (tinh trang ben ngoai) of
the goods that have been delivered. At the port of destination, the
consignee (nguoi nhan) also relies on the bill of lading to receive the
correct quantity, volume, and condition on the bill of lading and the
carrier only delivers the goods when the consignee has the bill of lading.

CONTENT

3) Document of title
The holder of the bill of lading is the person who has the right to claim
ownership of the goods described in the bill of lading. Therefore, the bill
of lading has the ability to circulate (co kha nang luu thong duoc), that is,
to be able to transfer. The reason it can be circulated is because the time it
takes to transport goods by sea is very long, so the transfers are
conditional to happen. However, this does not apply to airway
transportation because the transit time by air is very short, and there is no
space to circulate the bill of lading. (The airway bill is transported
together with goods, and arrives at the same time with the goods)

3
 Types of Intermodal Transport Service: Design
CONTENT

Mục đích sử dụng/ Tác dụng của B/L

- Đối với người gửi hàng:
+ Dùng B/L làm bằng chứng đã giao hàng cho người mua thông qua
người chuyên chở
+ Dùng B/L để chứng minh với người mua về tình trạng hàng hóa
+ B/L cùng các chứng từ khác lập thanh bộ chứng từ thanh toán tiền hàng
- Đối với người vận chuyển:
Dùng B/L để phát hành cho người gửi hàng khi nhận hàng để chở Dùng
B/L để giao hàng ở cảng đến
- Đối với người nhận hàng:
+ dùng VĐ xuất trình để nhận hàng
+ dùng VĐ xác định lượng hàng hóa người bán giao cho mình
+ dùng VĐ làm chứng từ cầm cố thế chấp chuyển nhượng
+ dùng VĐ làm chứng từ trong hồ sơ khiếu nại
+ Dùng VĐ làm chứng từ hoàn tất thủ tục XNK

CONTENT

Order B/L: Order B/L is the Bill of Lading made out to the order of a
person for delivery of the goods and that can be transferred by endorsement
to third parties. The named person following the order might be shippers,
banks, or consignees, among which banks appear to be the most popular
because most international transactions use L/C as the term of payment. In
that case, the bank will control the payment and then the bank will receive the
money, they will endorse the B/L to the buyer to receive the goods from the
carrier.
The order B/L can be negotiated by endorsement procedure, during which
the cargo ownership is transferred from the original cargo owner to another
beneficiary in the course of the voyage. On the reverse side of B/L, the
endorser has to give his signature, and stamp, and hand it to the endorsee and
the identity of the consignee then changes in the process.
Tại mục người nhận hàng (Consignee - để trống) có thể ghi:
1) To order of shipper: theo lệnh của người gửi hàng => nghĩa là đã trả trước,
thường dùng trong thanh toán T/T
2) To order of consignee: theo lệnh của người nhận hàng => nghĩa là có thể
chuyển nhượng được
3) To order of bank: theo lệnh của ngân hàng thanh toán => nghĩa là sử dụng
thanh toán LC
Vận đơn theo lệnh được dùng rất phổ biến trong buôn bán và vận tải quốc tế,
có thể chuyển nhượng được bằng cách ký hậu.

Some Food for Thought…

Straight B/L: Straight B/L is the Bill of Lading that clearly

specifies the name and address of the consignee to which the
goods are delivered. The shipping company will deliver the shipment
to its consignee on the presentation of an identification. Straight B/L
is generally used when the goods have been paid for or do not
require payment, therefore it is usually used for donations and gifts.
A straight B/L cannot be transferred by endorsement, thus is also
a non-negotiable document. A straight bill does not have any words
that are capable of conferring its own negotiability; i.e., it can only
be transferred to the named consignee and not to any subsequent
assignees. In case the consignee cannot receive the shipment, he
must authorize another person to pick up the consignment on
his behalf.

3
 The Functions of Transport

To Bearer
TypesB/L: Bearer B/L states
of Intermodal that deliveryService:
Transport shall be made to whosoever
Design
holds the bill. Such a bill may be created explicitly or it is an order bill that
fails to nominate the consignee whether in its original form or through an
endorsement in blank. Bearer bills of lading are the ‘archetypal fully
negotiable, i.e., repeatedly transferable bills of lading, designed to switch
hands often and easily. When the buyer has physical possession of the bearer
B/L, the cargo will be delivered to any person holding it and presenting it for
cargo delivery. This kind of bill of lading is therefore very seldom found as
there are huge risks involved in the misuse of this kind of B/L.
Recognize Bearer B/L: - In the first side of the B/L for the box consignee is
blank or it is written “to bearer”, “to the holder”, “in order of blank” (no
specified person, normally the order of blank means bear B/L)
- In the back side of the B/L, for the case of order B/L, the endorsement is
blank.

The Importance of Time in Transport

Different types of endorsement:

- Straight: mặt sau của B/L gốc, người ký hậu ghi rõ tên người hưởng lợi,
ký và đóng dấu xác nhận => thành vận đơn đích danh
- To order: mặt sau của B/L gốc, người ký hậu ghi “theo lệnh của…” (To
order of) => thành vận đơn to order và tiếp tục chuyển nhượng
- Blank: mặt sau của B/L gốc, người ký hậu chỉ ghi tên mình, ký và đóng
dấu xác nhận hoặc ghi rõ là để trống => thành vận đơn vô danh (To bearer
B/L) Eg: To order (chỉ ký tên ko ghi người hưởng lợi) = Ký hậu theo lệnh
của người cầm VĐ (To order of deliver)
- Without recourse: Bán không có bảo hành/ không cần ký hậu/ Đi kèm
bất cứ loại ký hậu nào