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Calculation of costs

Exporting from Canada Assignment

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A Capstone exercise both based on INTL704/222 (ITT) and INTL729/233 (EFF) CIFFA education courses.

Hand in soft copies of your (i) report and appendices in one file

Scenario

You are a graduate from seneca College. Your Graduation from Global and International Business Management is a proof that you worked hard, and you are confident that a great future is waiting for you. You received an e-mail from an old Professor who is consulting for an important company which is looking to export the following product: 5 Skids of Pfizer Vaccine for Hospitals Treating COVID-19 weighing 3.7 tonnes and having dimensions of 40” x 48” x 56” high

Your Customer, Doctors Without Borders, is located in Port-au-Prince, Haiti

Your Professor was recently promoted, and now (s)he is Director of Global Exporting for Apotex Pharmaceuticals (Toronto) and his/her potential customer is in the country you have chosen. They need a freight forwarder and they are thinking of working with you to manage managing the exporting of this product(s) from Canada.

In order to convince him and his managers that you are a suitable business partner and that you have a team that is capable of handling the job, he asks you for a Sales Presentation and Team Report to be Submitted to his Management Team. You have a short period to get everything done so you need to get started now.

With the knowledge acquired at Seneca, your understanding of Canadian and International Logistics, the desire to succeed in the business field, and a network of Seneca colleagues (team size fixed maximum 6 students! (don’t ask). You must finalize your teams by the end of week 2 (or you will be automatically enrolled in a team).

You accept the challenge. Success here holds the key your career and you are in control. To get you started, your former Freight Forwarding Professor offered to help you and prepared the following spreadsheet:

1

A CHECKLIST WITH THE IMPORT/EXPORT TRANSACTION PARTNERS AND THEIR ROLE

PLAYERS IN THE IMPORT/EXPORT BUSINESSROLEEXAMPLE DOCUMENTSWHAT YOUR TEAM SHOULD DOWHEN AND HOW YOU COLLECT DATA
SELLER/SHIPPER EXPORTER (your professor)Manufactures or distributor;Attend/assess your presentation, assess your proposal,Prepares, packages & labels the goods for exportIdentify a suitable CIFFA Freight ForwarderAll documentation to be completed by the seller’s agent (below), SLISign a clear sales contract, InvoiceMarket Research, Product DevelopmentStorage and Warehousing needs
BUYER/IMPORTERReceive Good Quality Goods on time and in good conditionRFP, Prepare a clear sales contractResearch the RoleSend a request for quote (RFQ)(include the e-mail )
SELLER’S AGENT (FREIGHT FORWARDER,CUSTOMS BROKER & BONDED WAREHOUSE)(your team)Find the best the carriers, route, risk analysisCalculates the freight rates.Arranges InsuranceHS Tariff classification;Clears the goods for customs.Where you will store the goods, tariff deferralQuotation, Sales Presentation, Import/Export Business Licence, Commercial Invoice, Export Permit, Export Declaration…Letters of Introduction, marketing materialsAWB, BL or multimodal transport documentsInsurance Certificate…Warehouse receiptPrepare an introduction letter, quotation, transport document(s)Identify HS code and put it in the documentsResearch the warehousing needs and explain what service is neededCIFFA site, membership
EXPORT REGULATORS &AGENTSRegulators who you contact issue food inspection certificates, CofO,Quality, Export PermitCofO, Export Permit, Inspection certificate, other certifications depending on your product and the terms of the letter of creditIdentify the specificForeign agencies to receive import approvalResearch the export requirements for the product
BANKERFinancial Institution(s) to arranges credit, loans and advice about payment methodProvides the Letter of Credit, Credit InsuranceContact a bank branch, (or BDC and EDC) talk with a Business Manager;Call, visit
IMPORT REGULATORS &AGENTSProtectionism (local manufacturers/jobs), policies,Trade AgreementsImport Permits, consular invoices, all documentary requirements for import, import customs brokerIdentify the specificAgencies in country to receive export approvalMIGRAS, gov’t website
ANY OTHER PARTIES (depends on your product) and should be included above.

SUGGESTIONS ON DIVIDING UP THE WORK

Team Report & Appendices

1. Team Leader: specify his/her responsibilities including the Incoterm, HS Code, Chargeable Weight, calculation of costs, routing and completion of a 1-page executive summary. Assemble the report and appendices into one document.

2. Other Team Members: assigned to a particular function (or 2) of this exercise based on your abilities and previous work/study knowledge and experience.

3. Pamphlets, business cards and evidence of your research contacts along with completed documents are important to the appendices.

Audio/Video Presentation: In this component you need to focus on selling the merits of your freight forwarding service to me, your potential client (the seller). By now you should have a clear idea of the benefits that the “Architects” of logistics and create a convincing marketing pitch to convince your client that your team will provide the highest value, has experts speaking in each area, and you should be chosen for the role of this exporting adventure. Maximum 2 slides per person, max. length = 10 minutes. Please choose an appropriate platform because your client does not have the time to wait 10 minutes for a file to download.

Individual Reports: An individual report (1-2) pages, concise, with what your own professional contribution to the team is and the importance of teamwork in the business world. (Use the form provided in the last page of these instructions.)

Project Mark Breakdown (see also the published rubrics attached to the assignments):

SectionMark
Written Report: Organized, complete, professional with Exec. Summary, Introduction/Clear Purpose, Business Case/CREEEPSS Risk Analysis, Description of each function including contacts, recommendations & conclusions and NO documents (see below)…/5
Appendices complete, accurate, well organized set of Import & Export Documents, evidence of contacts, APA sources…/5
Audio/Video Presentation: Clear, concise, convincing, Quality content in the PP slides and the flow of your exercise (max 10 minutes)./5
Individual Report: Professionalism: grammar, spelling, contribution, teamwork problems, key learning, next steps, etc…/5
Case Total

Group Project Report 1

Group Project Report

WOODMATE PAPER EXPORT CO.

Export to Australia

The Business School | Centennial College

Principle of Freight Forward

INTL 729 (Sec 005)

Sushma Marllyn Phillip Charles 300991148 Sumant Jasra 300988297 Hardik Sonera 300989418

Manpreet Singh 300990716 Kanika Sharma 300984511

Submitted to

Mauro Spies

December 08, 2018

Group Project Report 2

Conten YExecutive Summary:……………………………………………………………………………………………………..3

Buyer and Seller Details:…………………………………………………………………………………………………3

Product:…………………………………………………………………………………………………………………………3

Letter Head…………………………………………………………………………………………………………………….4

Shipment Timeline:…………………………………………………………………………………………………………4

Incoterm® being used (CPT):…………………………………………………………………………………………5

(CPT- Carriage Paid To):…………………………………………………………………………………………….5

FLOW CHART SELLERS WAREHOUSE TO BUYERS WAREHOUSE…..……………6,7

Vessel Routing and Lead Times:………………………………………………………………………………………8

How was the CN rail strike addressed?……………………………………………………………………………9

Calculations…………………………………………..…………………………………….9,10,11

Questions need to be answered…………………………………………………………..11,12,13

Documents………………………………………………………………………………..13,14,15

Reference………………………………………………………………………………………….16

Group Project Report 3

Executive Summary Our company Woodmate Paper Export Inc. is the leading paper exporters in Canada. Since the time the company has been formed, it has seen a lot of success in the Canadian market, and due to this reason the company is planning to go into export sector, thus changing the name of the company from Woodmate Paper Ltd. to Woodmate Paper export Co. The following report lists about the facts and figures related to an order from a company based in Brisbane, Australia.

The report shows the Incoterm the company will use, the product to be shipped, mode of transportation, dimensions and quantity of the product being shipped, as well as the calculations related to this order. Ideally, the company had planned to transport the shipment to the port of Montreal via CN railway and then further transportation would be done via ocean transport. However, due to the strike of CN railway, the company as immediately acted and decided to ship the container via road transport. Hence, the transport till port of Montreal will be done using truck and then after ocean transport will be taken.

Buyer and Seller Details

Product

The product for this shipment comes under the category of ‘Paper’.

Name of the Product: Woodmate 15DP009T, Printer Paper Copy Paper.

HS Code: 656839029

Seller Buyer

A Exporter (Seller):

Name: Woodmate Paper Export Inc. Address: 37 Markham Road, Toronto, ON M1G 3N1, Canada E-Mail: [email protected]

B Importer (Buyer):

Name: Rainbow Paper Ltd. Address: 96F Bedivere Road, Brisbane. RH11 0FX, Australia E-Mail: [email protected]

Group Project Report 4

Letter Head

37 Markham Road, Toronto, ON M1G 3N1, Canada

[email protected], +1-647-884 6612mailto:[email protected]

Group Project Report 5

Ocean Carrier Contact Details

Exporting Country: Name: Meridian Cargo Ltd. Phone: +1 (514) 636-8282 E-Mail: [email protected]

Destination Country: Name: Seabridge Global Logistics Phone: +6 (173) 860-8100 E-Mail: [email protected]

Freight Forwarder Contact Details Exporting Country: Name: Anchor International Freight Service Inc. Address: 2 Carlton St, Toronto, , ON, M5B 1J3, Canada. Phone: (416) 367-2118

Destination Country: Name: Tradewise Global Logistics Address: 1001 Londor Cl, Brisbane, Australia. Phone: +6 (113) 005-0098

Incoterm Being Used

CPT: Called as carriage paid to, is an Incoterm under which the exporter takes up the responsibility to arrange for the transportation of the goods and pays the freight for goods to a particular point as decided by the parties, mostly which is in the destination country. Apart from paying the freight for the journey, seller also assumes to pay for the services like export packaging, marking and labeling, any documentation fees for the freight forwarder, and loading charges at the seller’s location. Under CPT, once the goods are loaded into the vessel, the responsibility of the seller finishes, and it is the transportation carrier who is responsible for the delivery of goods at its destination. Since the seller is no more responsible after the goods being loaded, the buyer takes the risk of any kind of loss, or any extra cost incurred. This Incoterm can be used with any transportation mode, and also with the multimodal movements. Under CPT terms, the seller has no obligation to insure the shipment.

In terms of action responsibilities, division of costs and passage of risk, CPT terms may be illustrated as follows where the principal modes of transportation are airfreight and ocean freight:

Description Dates Order Received 27 November, 2018

Order Processing/ Packaging 12 December, 2018 Estimated Delivery Date 29 January , 2019mailto:[email protected]

Group Project Report 6

Flow Chart depicting the Route

Shipment Begins ————– Loading from warehouse- 18 Dec,

7 Hours travel time Via Road

Reaches Port of Montreal—— Port of Montreal- 18 Dec.

2 days Idle at Port for Port Procedures

Container loading on vessel– Container Loaded on 21 Dec on . Quebec Express, HAPAG

LLYOD

1ST Port of Calling ————- Reaches Panama, on 4 Jan

Group Project Report 7

Port of Destination ———- Reaches Brisbane, Australia on 28 Jan

Clearance at POD———– Customs Clearance and documentation at. . Port of Brisbane, (Idle Time – 2 Days)

. 8 Hrs. on truck or rail

Final place of Destination- Reaches warehouse via Road on 29 Jan. (Buyers Warehouse)

Vessel Routing and Lead Times

Group Project Report 8

Vessel Name: Quebec Express Carrier: HAPAG-LLOYD

Voyage No. Internal Voyage No.

Service Departure Arrival Transit Time

2.70E+05 18233 AT2 MONTREAL, QC BRISBANE DAYS

Port Arrival Date Time Status Departure Date Time Status

MONTREAL, QC Tuesday 18 Dec, 2018

16:00 Actual Arrival Friday 21 Dec, 2018

6:30 Actual Departure

PANAMA Friday 04 Jan, 2019

11:00 Estimated Arrival

Monday 07 Jan, 2019

15:00 Estimated Departure

BRISBANE Saturday 28 Jan, 2019

20:30 Estimated Arrival

N/A N/A N/A N/A

In total, it will take 41 days and 13 hours of travel for the shipment to reach Brisbane, Australia from Montreal, Quebec. Since, the incoterm is CPT, the exporter will be responsible for the shipment only till port of Montreal and after that the risk will be transferred to the buyer. This means that we will not be responsible for insurance of the shipment. However, it will be our responsibility to bear the cost of transportation till the buyers said location in the destination country, i.e., in this case port of Brisbane. We will bear the cost till the container reaches port of Brisbane, Australia.

How the CN rail strike addressed? Due to the strike caused by the workers of CN rail, the company initially had three alternatives to choose from. The first alternative was to wait for the strike to finish, which could take weeks or months. Second

Group Project Report 9

alternative with the company was to go with Canadian Pacific Rail. But according to the Intermodal Domestic Schedule, there was no route applicable for Toronto to Montreal. The third alternative being the road transportation was chosen by the company as it was most viable for the company. Moreover, it takes less time to deliver the goods to Montreal port.

Calculations Number of sheets in each pack = 5000 sheets

Number of packs in each case = 12 packs

Dimensions of each case = 11”x8”x6”

Weight of each case = 30 kgs

Size of pallet = 48”x40”

Number of cases organized on a pallet = 16 cases

(4 pallets in one layer, with a height of total 4 cases)

Container to be used= 40 Ft. container

Number of pallets that can be fitted into one container = 20 pallets

Number of cases to be transported = 20 pallets x 16 cases in each pallet = 320 cases

Dimension of each pallet = 48”x40”x28”

Actual Weight = 30 kg x 320 cases = 9600 kg

Total Volume = (48”x40”x28”)x 20 pallets

= 1075200 cubic inches

Total Volume in cubic feet = 1075200/ 1728

= 622.22 cubic feet

Total Volume in cubic metres = 622.22/ 35.3

= 17.63 cubic metres

Volume capacity of a 40 Ft. container = 45-50 cubic metres

Weight capacity of a 40 Ft. container = 25000-30000 kg.

Group Project Report 10

Since the weight and volume of the shipment can be easily fitted into one 40 Ft. container, thus we will

use one full 40 Ft. container.

Cost of one pack = CAD $ 75

Number of cases = 320

Total cost of the goods = 320x US $75

= CAD $ 24000

Cost of shipment

Description Cost (CAD)

Cost of goods 24000

Ocean Freight 8000 Domestic Freight 2000 Packaging Cost 1000 Road Transport 1000

Handling fees 500

Fuel Surcharge 500

Insurance 108.75

Total Cost 37617.25

Working Note for Insurance Calculation:

Commercial Invoice Value= $ 24,000

Cost of ocean Freight = $ 8,000

Domestic Freight = $ 2,000

Total = $ 34,000

Rate = $ 0.29%

Insurance (estimated = $ 98.6

Insurance premium)

CIF (cost, insurance, = $ 34,098.6

Freight)

Plus 10% as per valuation = $ 37508.50

Group Project Report 11

(110% of $ 32093)

Rate = 0.29%

Insurance Premium = $ 108.75

List of questions for effectively and efficiently moving the cargo.

What alternative would you suggest to the issue of CN rail strike and Why?

To address this issue the first option available is the rival of CN Rail that is the Canadian Pacific

Railways but if we look the case the strike is just one day before the loading of the container, so

it is a time sensitive issue that requires an immediate alternative.

So to address this issue we will choose the flexible mode that is the road transport by the use of truck, ideal for the short distances like Toronto to Montreal.

Though it will cost more than the rail but will eliminate the delay as it is faster than the railways.

How would the protection and safety of the goods would be ensured?

Palletizing and Unitizing the Cargo:

 Printing paper shall be compactly wrapped in specified quantities with good quality Kraft paper or shrink-wrapped in plastic.

 Closing shall be done using the carton adhesive, gummed tape or pressure sensitive adhesive tape for the final securing.

 Weather resistant shrink wrapping and brown Kraft lamination shall be used for skid wrapping.

Group Project Report 12

 For making of cartons and packaging- fibreboard, corrugated, single wall board with one corrugated sheet between the two flat sheets shall be used.

 In all instances the smallest unit package must be labeled and identified as to contents and banded packages must contain the precise number of specified units.

What guidelines would be given regarding the unloading of the cargo?

Unloading instruction

 All skids, pallets and cartons shall be unloaded on to a dry, secure, weather protected horizontal surface.

 Cargo would be stowed in the reverse order of desired cargo discharge.

What if the goods get damaged during the transit?

If the goods are damaged during the transit then our incoterm CPT covers the insurance, so it will cover the loss if any such incident happens during the shipment.

How will be the goods marked and labelled to ensure proper guidelines for delivery?

 The labeling and marking of packaged printing paper will display the contract number, description of the contents, the number of items and the consignee’s address.

 A symbol ‘keep dry’ shall be used for the precaution to avoid any damage from water and moisture to the printing papers.

Documents

1. Commercial Invoice

Commercial Invoice.pdf

Group Project Report 13

2. Packing List

Packaging List.pdf

3. Bill of Lading

Sample Ocean Bill of Lading[4519].pdf

4. Export Permit/Declaration

Export Declaration Final.pdf

5. Certificate of Origin

Final Certificate of Origin[4518].pdf

6. Letter of Credit

TD Canada Trust

TD Canada Trust, 7670 Markham Rd, Markham, ON L3S 4S1

Group Project Report 14

Tel: 1800-565-4563| Website: www.tdcanadatrust.com Swift:TDAAHH5

Advice Number: HTH2018 Amount

Advice Date: Sept 30,2018 CAD $ 37617.25

Issue Bank Ref:

Expiry Date: Nov 20, 2018

Beneficiary Address Woodmate Paper Export Inc. Address: 37 Markham Road, Toronto, ON M1G 3N1, Canada E-Mail: [email protected] Applicant address Rainbow Paper Ltd. Address: 96F Bedivere Road, Brisbane. RH11 0FX, Australia E-Mail: [email protected]

Irrevocable Letter of Credit This is the following Letter of Credit that is being Issued;- Commonwealth Bank 400 George St, Brisbane City QLD 4000, Australia Take Into consideration the following Terms and conditions:- By negotiating your draft, you can get a letter of credit and when you present the

following documents you can get the full amount of the Invoice. 1. Commercial Invoice = 2 Copies 2. Export declaration Document = 1Copy 3. Packing List = 1 Copy 4. Certificate of Origin Document = 2 Copies 5. Bill of Lading = 1 Copy Evidence of transport 320 Cartons having 9600 sheets of paper. Goods are transported from Canada, Port of Montreal to Brisbane, Australia. The Shipment date for transportation is 21st December 2018. Partial shipment is not allowed. All costs that are incurred outside Canada is borne by Beneficiary. We agree that this letter of credit will be honoured upon presentation at the applicable

date and time on or before the expiration date.mailto:[email protected]mailto:[email protected]

Group Project Report 15

In the event of a draw under this letter of credit, the Beneficiary is required to present the

original letter of credit, including any amendments issued after the date of origin and

other documents as per the requirement of the crediting institution. Please read the following instructions carefully. If you don’t comply with the documents

you may further contact the buyer. TD Canada Trust Hardik Sonera Authorized Signature

References:

INCOTERMS. (n.d.). Retrieved from http://actlogisticsinc.com/incoterms/

LTD, S. (n.d.). Current Market Rate. Retrieved from

https://www.searates.com/reference/portdistance/

Customer Resources (n.d.). Retrieved from https://www.cpr.ca/en/customer-resources-

site/Documents/intermodal-domestic-schedule-october-2018.pdfhttps://www.cpr.ca/en/customer-resources-site/Documents/intermodal-domestic-schedule-october-2018.pdfhttps://www.cpr.ca/en/customer-resources-site/Documents/intermodal-domestic-schedule-october-2018.pdfhttps://www.searates.com/reference/portdistance/http://actlogisticsinc.com/incoterms/

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