Page 187 - DMGT547_INTERNATIONAL_MARKETING

International Marketing

Notes 10.6.2 Air

Out of all the modes of transports the air accounts for only 1% of the total international freight
movement. It is the fastest growing mode and is becoming less confined to expensive products.
Air transport has the highest absolute rates but exporters have discovered that there are many
advantages associated with this mode. First, air transport speed up delivery, minimizes the time
the goods are in transit and achieves great flexibility in delivery schedules. Second, it delivers
perishables in prime condition. In India, the perishable goods like cut flower, mushrooms and
fruit are transported by air to carry out profitable export. Third, it can respond rapidly to
unpredictable and urgent demand.

Example: Quick replacement of broken machinery, equipment, or a component part can
be made by air.

Fourth, it reduces the minimum damage, packing and insurance costs. Finally it can help control
costly inventory and other hidden costs, including warehousing, time in transit, inventory
carrying cost, inventory losses and the paper work necessary to file claims for lost or damaged
goods. These costs will increase as the time in transit increases.

10.6.3 Water

Bulk shipping is important in international trade because it is one of the most practical and
important and efficient means of transporting petroleum, industrial raw materials, and
agricultural commodities over long distances. About 51% of the global bulk fleet consists of oil
tankers, while dry bulk carriers account for 43%. The remainder of the fleet is made up of
combination carriers, which are capable of carrying either wet (crude oil and refined petroleum
products) and dry (coal, iron, iron ore and grain) bulk cargo. The bulk shipping industry being
highly fragmented as no one organisation, which has more than 2% of the total fleet.
There are basically three types of shipping companies: (a) An ocean freight conference line is an
association of ocean carriers that have joined together to establish common rules with regard to
freight charges and shipping conditions, (b) An independent line is a line that operates and
quotes freight rates individually and independently without the use of a dual rate contract and
(c) Finally, a tramp vessel is a ship not operating on a regular route or schedule. Tramp steamers
do not have the established schedules of the other two types of carriers.

Task Name a company that uses all the three modes for distribution. Can you name the
countries to which it distributes products through each mode?
Self Assessment

Fill in the blanks:
12. If the demand for the product is urgent and unpredictable, then ideally …………….transport
should be used.
13. A ……………… is a ship that does not operate on a regular route or schedule.

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