Silicachem Corporation: Outbound Freight Transport Report Essay

1200 Words Oct 28th, 2012 5 Pages
Full-time
MSc in Logistics & Supply Chain Management
2011/12

Freight Transport Assessment

SilicaChem Corporation:
Outbound Freight Transport Report

Jia GUO, Bethie
09/01/12

1. Introduction
This short report recommends the best options of serving the Spanish distributor and the North America customer based on information given. Although cost is the main consideration in the analysis, various other criteria such as service level and transport modal features are also examined. In order to deliver a more comprehensive discussion, weaknesses of the recommended modals are listed, which should be carefully evaluated when further information is available.

2. Serving the Spanish distributor

2.1
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Another alternative the company could consider is using multiple carriers in intermodal transport. As illustrated in Appendix 1, the quotations of the same route or activity from two carriers can be significantly different. Therefore, it is beneficiary for the company to understand the cost components of carriers and the rationale behind the quotations, in order to grasp the opportunity of better deal and more reliable service (Jennings and Holcomb, 1996).

In terms of transport mode selection, SilicaChem could consider the feasibility of using only road and rail transport in intermodal so as to boost transit speed. However, further information concerning routing and cost are needed for detailed evaluation.

3. Serving the North America customer

3.1 Recommendation
As shown by the calculation in Appendix 2, sea freight is more cost effective than air freight. Based on the assumptions listed in the appendix, sea freight is estimated to have an annual total cost of about £264,000 lower than that of air freight. The main contributor of this difference is shipping cost, as the total annual shipping rate of sea freight is £310,000 cheaper. As a result, although adopting air freight would provide a saving of about £60,000 in inventory holding and warehousing costs, the total cost of sea freight is still substantially lower.

Apart from the cost factors, sea freight would also