LOGISTIC CASE STUDY : NÜRNBERG AUGSBURG MASCHINENWERKE (N.A.M.) -ANSWER PART 2

 

if you are looking for questions 1 to 5 :ANSWER PART 1 LINK

6. The Brazilian buyer wants the buses delivered at Santos. Weiss looks up the International Chamber of Commerce’s Incoterms and finds three categories of “delivered” terms:

There will be three delivered terms which are the:

DAT (delivered at terminal) or known as DPU (Delivered at place unloaded) in the year 2020. DPU means that the seller will only take responsibility for clearing or unloading the goods at the destination, the seller takes all risk and responsibility before the goods reach the terminal at the name of port or place of destination. Terms of DAT were often used by the integrated containers which have multiple consigners.

 

DAP（Delivered at place）is an international trade term that used to describe the deal in which is the seller takes responsibility to pay all the cost and potential loss, damage and just delivered the goods to a specific location but without unloaded and give to the buyer. When the seller reaches the location and passes the goods to the buyer, the buyer will take over the responsibility and risk to unload and clear the goods.

 

DDP (Delivered duty paid) is an agreement that places the maximum responsibility on the seller. In this type of transaction, the seller will take all of the responsibility while transferring the goods to the hand of the customer or particular location and destination. The seller will also be responsible to arrange for all the costs of transportation such as the value-added tax, import duty, and so on. Other than that, the seller is also obligated to prepare the import clearance, agreement, related documents, sales contract, and so on.

 

In these three incoterms, first, need to exclude the DDP because it was the riskiest type of transaction for the company as the DDP put all responsibility on the seller. After that, if left two choices which are the DAT (transfer goods with unloading) and DAP (transfer goods without unloading). After comparison, DAP is less risky and less costly than DAT. However, it has been suggested to choose DAT. The reason is that even the DAT is more risk and costly, but it may show your customer the sincerity of cooperation and give them more satisfaction which can increase the opportunities for long-term cooperation.

7. Would you make the same routing recommendation for the second, larger (199 buses) components of the order, after the initial 90-day deadline is met? Why or why not?

The answer is no. This is because the second larger order does not have high pressure on the time limit such as the first 25 buses need to send before November 15. It means that the subsequent product may have a loose time to send to goods and have more choices in the choice of route. When time is not that important, it needs to consider more about the cost. As we know, the use of waterways is cheaper than railways. The decrease in the cost may also increase the profit of the organization. However, it was not suggested to fully use the waterways as it was much slower than the railway. The slow transit time will bring a certain degree of profit, but it may cause the company to lose customer satisfaction and it was not a good idea. In conclusion, it was suggested to combine the use of waterways and railway depending on where are the factory and destination located and the customer requirements to decide the suitable route.

 

8. How important, if at all, is it for N.A.M. to ship via water to show its support of the European Union’s Motorways of the Seas concept?

It may depend on how the opinion of the people look to the European Union’s, if people like the EU may choose to support motorways of the sea concept, vice versa. A company is always mainly focused on the profit earn which is also usually analysed with cost-benefit. Based on the cost-benefit analysis, it can say that waterways are cheaper in cost, but railways increase customer satisfaction because faster. However, if N.A.M can use waterways to show its support of the European Union, it may possibly bring an opportunity for N.A.M when it wants to expand the market in a European country. This means that support the European Union’s motorways of the concept of the sea can be defined as an opportunity cost. It suggests that N.A.M should support the European Union’s motorways of the concept of the sea to a certain extent while taking care of the company profits and customer satisfaction in order to minimize the risk and possible losses.