Your team will play the roles of a Freight Forwarder and a materials and distribution manager for Apotex Pharmaceuticals in Montreal. Your freight forwarder is GCA (Global Canadian Agents) and Apotex can take care of the delivery to GCA at the airport terminal using their own trucks. Your team is responsible for all transportation, distribution, materials, and purchasing for your firm.
Your companies have been hired to deliver aid to the conflict zone of Yemen, supplying emergency pharmaceuticals to Medicin sans Frontiere in that country. The United Nations has brokered a fragile peace plan, and the blockade of Yemeni Ports and risks to air traffic will be lifted for a one-week period. Your task is to take this opportunity to deliver 4.5 cubic meters of materials weighing 1.2 metric tonnes and having a value of $8,000,000.00. You are responsible for deciding all logistics necessary to deliver the goods to the hospital in Yemen.
You have, so far, found the best two choices to get the cargo close to the destination, but you will need to recommend the best choice and the method of delivery to the final destination in the Governorate of Amran, in the north-west interior of Yemen.
|Alternative 1||Alternative 2|
|Montreal – New York – Riyadh (Air freight, UPS via JFK) Freight rates: Montreal – JFK by express truck, CAN $15.00/100 lb. JFK – RUH: +500 kg – US $11.02/kg||Montreal – Paris – Cairo (Own consolidation to Paris, then your French agent’s consolidation to Cairo) Freight rates: YUL – CDG: +300 kg – CAN $3.36 CDG – CAI: +500 kg – EUR 6.93|
Exchange rate: US $1.00 = CAN $1.30
EUR 1 = CAN $1.40
As a team, Apotex, Freight Forwarder, and the customer (Medicin sans Frontiere) decide on the following:
- Calculate the chargeable weights and freight charges for both alternatives. (5 marks)
Ref.: Module 8
To Calculate Chargeable weight:
4.5 cubic meters of materials equal to 274607 cubic inches
To convert cubic inches to Kgs, divide cubic inches by 366 (as per the US air cargo volume conversion)
therefore 274607 cubic inches equals to 274607 / 366 = 750.30 kgs.
Since the actual weight of the consignment is 1200 kgs that is more than the chargeable weight, we shall consider 1200 kgs for freight calculation.
The weight of the consignment is 1.2 metric tons that are 1200 kgs.
Given; US $ 1 = CAN $ 1.30
EURO 1 = CAN $ 1.40
Conversion of EURO and Canadian dollar to the US dollar and pound to Kg.
EURO 1 equals to US $ 1.21
CAN $ 1.41 equals to US $ 1.08
100 pounds equals to 45.36 kgs.
Montreal – JFK by express truck
CAN $ 15.00 / 100 lb. = US $ 11.62 / 45.36 kgs.
(A) For 1200 kgs consignment (1200 / 45.36) * US $ 11.62 = $ 307.41
JFK – RUH; +500 – US $ 11.02 /kg
(B) for 1200 kgs. consignment 1200 * US $ 11.02 = $ 13224
Total Freight charges (A + B ) $ 307.41 + $ 13224 = $ 13531.41
YUL -CDG; +300 Kgs – CAN $ 3.36/ Kg = US $ 2.60 /Kg.
(C) For 1200 kgs of consignment = 1200 kgs * US $ 2.60 /kg. = $ 3120
CDG – CAI; + 500 kgs. – EURO 6.93 / Kg. = US $ 8.39 /kg.
(D) For 1200 kgs of consignment = 1200 kgs * US $ 8.39/kg = $ 10068
Total freight charges (C + D) ($ 3120 + $ 10068) = $ 13188
Montreal to JFK $ 307.41
JFK to RUH $ 13224.00
Total Freight $ 13531.41
YUL to CDG $ 3120.00
CDG to CAI $ 10068.00
Total Freight $ 13188.00
- Conduct a CREEEPSS risk analysis for conducting such a delivery to Yemen. Use this criteria and the above freight costs to recommend a route See: The Consequences of War in Yemen (3 marks)
Ref.: Module 9
MSF. (2019, June 25). Indirect consequences of war in Yemen | MSF. Médecins Sans Frontières (MSF) International. https://www.msf.org/indirect-consequences-war-yemen
- Find the most appropriate mode(s) and routes for the final delivery (from Cairo or Riyadh) to the hospital in Amran. Outline the finalized complete route on appropriate maps (door to door). (3 marks)
Ref.: Module 10
- Recommend the Incoterms® for Apotex to use in this case, given the available information on your customer. Completely justify your decision. (3 marks)
Ref.: Module 11
- Outline the role the freight forwarder will play in the transaction and describe all the necessary transportation documentation. (3 marks)
Group Assignment Due Module 12: Submit your completed assignment before the end of Module 12 on Saturday, 11:59 P.M. Eastern Time (EST).
Professionalism, style, organization and format (3 marks)
Total 20 marks (value 15%)