The practice of logistics management refers to a segment of supply chain, which is responsible for the planning, implementation and controls; consequently, it enhances effective, efficient and reverse flow of goods and services. Essentially, these business acclaimed decisions are highly anchored on information factor between the origin and consumption level with a view to accomplish the satisfactory goal for customers as defined in the organizational objectives. This process is charged with the management of materials elements, distribution, channels as well as the management of the supply chain (Harrison & Hoek 2002). This paper analyzes some of the logistics issues that are present during the transportation of the locomotives and coal wagons from Ruhr region of Germany to the point of use at the Abbot region of Australia. Essentially, this mission is driven by a mining company, which intends to transport thermal coal from Central Western Queensland across to the Abbot port. As a logistic specialist of the company, I, therefore, intend to analyze some of the logistic issues that are eminent during the transportation of the products through the overseas mode. As a matter of fact, the logistics issues developed from the point of origin, the port as well as transit and destination issues will be analyzed.
The mining company has entered into an international contract with a Germany-based supply, which is pegged with the role of providing the locomotives and the coal wagons. When the local corporations enter into such contracts, there are certain terms that are negotiated through and which aim at reaching consensus on matters pertaining to prices, characteristic of goods as well as the quantity of each. In essence, the latter factors refer to some of the logistics involved between the two trading partners. In fact, these factors are distinctly easier to resolve. However, there are other factors that comprise the whole process of acquisition and transportation of the goods and services. These include the local and international federal regulations among other international commercial terms commonly referred to as the INCOTERMS (Harrison & Hoek 2008).
In essence, the latter defines the limit upon the risks and responsibilities of the shipper or the consignee with respect to trading partners. International Chamber of Commerce (ICC), which is located in Paris, France is the body charged with the responsibilities of overseeing and administration of INCOTERMS, which are focused on regulating international trade between major trading countries of the world. Essentially, the INCOTERMS were first established in 1936 and undergoes subsequent amendment every ten year period. The importation of these locomotives, therefore, cannot elude the hand of some of the 13 major INCOTERMS besides other pre-existing trading practices of Germany, which is our company’s trading partner (Steyn 2003).
The key challenges that our company has to meet in order to legally import the locomotives and coal wagons include: settlement of the ex-works logistics; cost insurance freight, delivery duty as well as the free on board requirement with the authority. Ex-work basically means that quite often, sellers only delivers the commodity at the selling premises (Queensland) at disposal of the client, but the commodity is yet to be cleared from for the export purpose. Awaiting clearance for exportation, the company is bound to incur further costs with respect to storage and perhaps securing the cargo from intruders who further pose other security threats of loss from theft. In the incidence that the seller takes up the responsibility of the good until its departure from the home country to the importing destination, Australia, there are other hefty accruing costs that may render the activity non-profitable in the long-run through increased costs of production.
In addition to that, it may also involve a prolonged and uneasy engagement in mutual for the conviction of the supplier, Krefeld-Uerdingen manufacturing premises, to incur the insurance and other cost till the commodity arrives at the discharging port for transportation. Indeed, the latter may occur if the Krefeld-Uerdingen, for one reason or the other, failed to factor in the CIF costs into the price of locomotives. Indeed, the latter forms a number of logistics that may cause roughness in the way of acquiring the locomotives and coal wagons from their production nerve (Grainger 2001).
On the other hand, our company may also experience other logistical issues within the framework of our local importation perspective. In essence, the Australian nation comprises of various transportation logistics, especially due to its immense size and location of the proximity of the destination, mining company to the coastline. Despite the availability of the sea, the cost of transporting both locomotives and the coal wagons is basically high, which will derail the final output prices of the company’s product. Furthermore, after the shipment of the product, the company will use the anticipated railway line, which is less flexible thus necessitating supply of other supplementary means of transportation. The railway transportation of coal from the point of production to Abbot is further derailed by the fact that the Queensland railway comprises of mainly the standard gauge, which are quite efficient in transporting coal (Donnelly 2006).
The Australian railway, however, are mixed gauge and may pose the challenge of compatibility and, therefore, further negating the efforts by the company to transport the product via the railway line. Furthermore, the completion of construction of the railway is unguaranteed and may pose serious transportation problems through additional costs on alternative means of transport following the railway failure. These presents just a few of the challenges that face the transport segment of importing the locomotive and coal wagons from the Germany producer, which may adversely affect the final price of the commodity produced by the company (Mwebaza & Kotze 2009).
As a matter of fact, the Australian government possesses strict regulations that appertain to importation of personal goods and services. For instance, contained in the Quarantine Act of 1908 is the common wealth law. In essence, the imported commodities are subjected to a thorough scrutiny with respect to commodity identity. Indeed, the laws provide detailed requirements, which may not be sufficiently covered by our company’s procurement data. Some of requirements include oversees loading ports, names of the supplying companies and products, etc. The natural human errors, which are at times inevitable, may result to delays in repositioning of the goods and, for that reason, affecting the general operations of the company.
In addition to that, the product is bound to face other probable challenges with respect to the minimum document requirement policy to present before the Australian Quarantine and Inspection Service. Basically, the latter may be done for further risk assessment of both the locomotives and the coal wagons. This prompts the company into shipping through a series of compliance logistics with respect to the laws of land (Australian Quarantine and Inspection Service 1998).
Essentially, the company is challenged with the improved packaging of the commodities with respect to locomotives and the wagons. However, the packaging responsibility is barely pegged on the Krefeld-Uerdingen while the effects of improper packaging, which would warrant inspection in Australia, basically, place the company in a risk for thorough inspection. Furthermore, low profile packaging may also give room for other negatively impacting mechanisms such as the Quarantine and post treatment. Quarantine means that some of the imported commodities, which may be violating the Quarantine Act, are retained. Consequently, the company is propelled for additional costs at the inspection front. This may also be accompanied by the destruction of the products or re-exportation of the product away from the country, which forms other major cost upon the disclaimant.
Furthermore, the latter may also be subjected to post treatment, which essentially means that the product undergoes further treatment when dangerous elements are identified as a way of detoxifying the commodity. This would impact negatively on the cost of production of the company and lead to constrained production function, which are threat to the company’s future prospects (Nairn & Tanner et al. 1996).
The careful planning of the activities within and without the Australian boarders comprises of various impediments. There are limited options in terms of the company’s capacity to negotiate on the terms and conditions of importation of new products from other countries as required ion both the international and the local scenes and, therefore, posing various challenges as to start off the importation plan. However, the importation remains the key to propulsion of the projects as the raw material and, therefore, prompting the company to complement its strategies into acquiring the legal authority for importation of the product.
Nevertheless, due to the bureaucracy involved during the establishment of the requisite legal terms with the company, planning for the period between importation and the actual processing period becomes extremely hard to project. It happens due to the heap of the pre-existing uncertainty between the time taken at obtaining legal permit to import from the local authority, establishing contacts with the supplier, and payment of import duties as well as other unprecedented challenges that may arise in the process. Indeed, this amounts to the hardships in establishing the time frame for the running of the company activities, especially those dependent on the import while sustaining the current production echelon (Murthy & Blischke 2006).
While focusing on the external factors, the company also ought to put into considerations the fact that it has the internal factors, which also contributes either directly or indirectly towards the achievement of the laid down objectives. As a matter of fact, the company ought to focus on the ability of its topmost decision making panel, which is essentially for establishing the most vital decisions with respect to the company’s progress. Moreover, various negotiation and arbitration ventures should be ideally an established segment of the management teams of the company in order to have a formidable task force that will seek to amass mutual understanding between internal organs of the company and the external ones (Shelton & Paruk 2008).
In essence, such taskforce will be charged with the uttermost responsibility of establishing contact with the government, suppliers or other parties in which the company fall into discord with. This will ensure quick and smooth propulsion of all set activities within the company’s strategic plan besides minimizing unnecessary costs that may be incurred due to poor arbitrary skills between the company’s taskforce and other external stakeholders. Furthermore, the company posses a sound team for controlling and coordinating the overall activities of the company ranging from the sea activities to the inland scenes as well as overseeing the full compliance with both the international and local regulations, pertaining to importation of products of various types.
Finally, for the company to exercise its freedom as well as to ensure compliance with the laws, it must be in a position to establish links with the international corporations with a view to acquiring profitable adjustment mechanisms that would help accommodate the prevalent changes in the business environment and the emerging trends while at the same time ensuring quality production function guided by the law of land.
This text was written by Liana Wongа who is a writing editor at https://superbessay.com/write-my-problem-solution-essay/