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03_10 - Road Freight Planning(TBD)
03_10 - Road Freight Planning(TBD)Business Management and Finance Courses » Udemy - International Logistics & Transportation in Supply Chain. 2023-5 |
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| 03 - Surface Transport Road and Rail Udemy - International Logistics & Transportation in Supply Chain. 2023-5 0 00:00,240 --> 00:01,200 Road Freight Planning. 1 00:01,230 --> 00:06,390 Now let's discuss about freight and the factors that help us to determine the freight 2 00:06,480 --> 00:08,910 in order to calculate the rod freight. 3 00:09,090 --> 00:11,910 Now as you all know there are different modes of transport. 4 00:11,940 --> 00:16,100 That is a road, rail, air and sea mode of transport. 5 00:16,110 --> 00:19,050 So in this chapter we will discuss about road freight. 6 00:19,200 --> 00:24,270 Now before going deep in to the topic it is very important to understand the term freight. 7 00:24,360 --> 00:31,800 So if a transporter delivers the goods from the source to the destination he provide a service and 8 00:31,800 --> 00:35,490 they charge certain amount from the company for providing this service. 9 00:35,880 --> 00:39,060 And that service is charged on the basis of road freight. 10 00:39,090 --> 00:41,680 So freight is a charge for movement of goods. 11 00:41,730 --> 00:46,040 So if you are moving your goods by road mode of transport it is known as road freight and the 12 00:46,050 --> 00:49,950 road freight is denoted in the local currency of the country. 13 00:50,100 --> 00:56,670 Now when it comes to international movement by sea mode of transport the currency which is used most 14 00:56,670 --> 00:59,460 widely all around the world is dollars. 15 00:59,490 --> 01:05,490 So the ocean freight is charged on the basis of dollars whereas the road freight will be charged in 16 01:05,490 --> 01:09,180 India on the basis of rupees which is the local currency. 17 01:09,360 --> 01:15,510 If the trucking is for domestic delivery so if a ship arrives to Mumbai the container is unloaded 18 01:15,510 --> 01:20,360 from the ship and it is delivered by trucking to the factory in Nagpur. 19 01:20,370 --> 01:26,760 So the road freight will be charged on the basis of rupees as the delivery is domestic whereas the 20 01:26,760 --> 01:30,420 ocean freight will be charged on the basis of dollars. 21 01:30,450 --> 01:32,490 So let's understand what are the components 22 01:32,490 --> 01:36,090 which determine the freight? The first is the fixed component, 23 01:36,090 --> 01:41,370 the second is the variable component and third is the transporter margin or transporters profit. 24 01:41,400 --> 01:47,350 So let's first discussed about fixed component and what are different types of fixed components? 25 01:47,370 --> 01:49,800 So the fixed components are the drivers salary. 26 01:50,160 --> 01:55,890 You have to pay a salary to the driver who is driving your truck and delivering your goods. 27 01:56,190 --> 01:58,480 So a driver salary is a fixed component. 28 01:58,650 --> 02:01,110 Also a driver has a helper with him. 29 02:01,410 --> 02:07,290 So you have to pay a salary to that helper to along with the helper salary third is the trip allowance. 30 02:07,470 --> 02:12,570 See a driver is working for you day and night to drive your truck and deliver the goods. 31 02:12,570 --> 02:20,010 So the owner of the truck has to make sure that the trip allowance is given to the helper and the driver. 32 02:20,340 --> 02:28,320 So this also is a fixed component and this trip allowance is paid by the truck owner to the driver based 33 02:28,320 --> 02:30,750 on the trips that the driver will conclude. 34 02:31,170 --> 02:33,180 Now talking about mandatory document. 35 02:33,210 --> 02:38,640 Now as we all know driving a vehicle on the road comes with many mandatory documents. 36 02:39,030 --> 02:45,480 Even if you are a car owner you need to have a license, you need to have a road permit, car insurance. 37 02:45,510 --> 02:48,480 Similarly there are mandatory documents for a truck. 38 02:49,140 --> 02:55,810 Documents like road tax, road permit, insurance, pollution certificate, vehicle fitness certificate. 39 02:55,920 --> 03:00,520 So this are the documents which a truck has to comply to run on the road. 40 03:00,540 --> 03:06,840 So it is very important for the truck owner to have all this document available and this document do come with 41 03:06,840 --> 03:07,800 certain charges. 42 03:07,830 --> 03:09,720 So this is also a fixed component. 43 03:09,810 --> 03:13,980 For every truck you will need mandatory documents which are a fixed component. 44 03:14,190 --> 03:16,500 Now talking about EMI Every Month 45 03:16,500 --> 03:17,160 Instalments. 46 03:17,520 --> 03:19,620 Now trucks are very costly, right? 47 03:19,740 --> 03:26,550 So to enter road freight business some people take a loan from the bank on certain rate of interest 48 03:26,550 --> 03:28,080 which comes with a installment. 49 03:28,290 --> 03:30,110 That is also a fixed component. 50 03:30,300 --> 03:32,850 And then comes truck depreciation. See 51 03:33,000 --> 03:33,900 truck is an asset. 52 03:33,930 --> 03:38,640 The more it will run on the road the more it will depreciate and the value of the truck will keep on 53 03:38,640 --> 03:39,360 decreasing. 54 03:39,390 --> 03:41,810 So we need to consider that too 55 03:41,820 --> 03:49,260 as a fixed component. As a truck which you own for say $30,000 after running for consistently five years 56 03:49,290 --> 03:52,370 the value of the truck will drop to $5,000. 57 03:52,380 --> 03:58,890 So $25,000 difference is a truck depreciation which is a fixed component. 58 03:59,130 --> 04:04,940 So if a truck runs normally this are all the components which the truck owner has to bear. 59 04:04,950 --> 04:11,070 And the truck owner will make sure that the fixed components are recovered from his customer and his customer 60 04:11,070 --> 04:17,550 will be the manufacturers, the exporters who want to deliver their goods to the airport, seaport and 61 04:17,550 --> 04:18,510 the retail stores. 62 04:18,660 --> 04:25,140 So we can say that when it comes to charging a road freight the fixed component are calculated any road 63 04:25,140 --> 04:31,500 freight is quoted to the customer, which includes the fixed component now coming to variable components. 64 04:31,530 --> 04:38,400 Now as the word denotes variable component is the component which change depending on quantity, distance, 65 04:38,400 --> 04:42,690 the fuel price, the maintenance cost, the cost and the incident. 66 04:43,470 --> 04:50,010 Now see, for example, the more the quantity exporter has to deliver, the more detailed this will 67 04:50,010 --> 04:52,080 be for tracking the goods. 68 04:52,170 --> 04:53,880 Same goes to distance. 69 04:53,940 --> 04:57,780 The longer distance truck travel, the more fuel it will consume. 70 04:57,780 --> 04:59,850 And there will be more wear and tear to date. 71 05:00,190 --> 05:07,540 Also the international fuel price determines the growth rate is due to certain geopolitical issues. 72 05:07,990 --> 05:13,930 The fuel prices keep on fluctuating, which also affects the road freight now coming through maintenance 73 05:14,770 --> 05:19,780 machines and it cannot run 24/7 without being maintained properly. 74 05:20,110 --> 05:23,560 So every 15 days a truck has to be maintained. 75 05:23,590 --> 05:27,290 The Indian oil has to change, the battery have to be checked and changed. 76 05:27,490 --> 05:29,020 This also comes with the growth rate. 77 05:29,050 --> 05:34,360 Also, there is a variable component as it has a fixed life cycle. 78 05:34,420 --> 05:36,520 So more of the product is making. 79 05:36,820 --> 05:38,980 There will be more bearing that on the tyres. 80 05:38,980 --> 05:44,740 So it is very important to understand that tyre cost and the depreciation of the tyre. 81 05:44,770 --> 05:50,710 Also at times there may be a situation in which there can be certain incidents which may also which 82 05:50,710 --> 05:53,080 won't be covered by the insurance company. 83 05:53,290 --> 05:59,380 This is also a variable component and you want to keep on running behind the insurance company for some 84 05:59,380 --> 06:01,660 mid-air breakdown or light breakdown. 85 06:01,690 --> 06:06,640 Now, when we sum up all these components that is fixed component and variable component, we have to 86 06:06,640 --> 06:12,670 consider the transporters profit margin is a transporter will provide the service to make profit so 87 06:12,670 --> 06:19,360 he will make sure to believe these all the freight along with his transporter margin and the transporter 88 06:19,360 --> 06:25,360 margin varies from 5% to 30% depending on the transporter and demand and supply. 89 06:25,390 --> 06:29,530 So the transporters profit can be calculated by the total revenue. 90 06:29,530 --> 06:36,730 That is the amount that the transporter bay or the customer lists, the expenses and other then fixed 91 06:36,730 --> 06:40,240 component, variable component and the transporters profit. 92 06:40,270 --> 06:45,640 While planning for the road freight and calculating all freight charges, we need to consider other 93 06:45,640 --> 06:52,270 components too, which includes the type of the weather the truck is LCD CV depending on the volume 94 06:52,270 --> 06:54,420 of the cargo you have to transport. 95 06:54,440 --> 07:00,250 Also, the condition of the road is very important, as if the condition of the road is really bad. 96 07:00,280 --> 07:04,730 It will lead to more wear and tear to the tires and the truck body. 97 07:04,750 --> 07:09,250 So in that situation, you have to calculate your road freight accordingly. 98 07:09,490 --> 07:16,330 Also, no entry restrictions have to be considered as if a foster road from where it can reach a destination 99 07:16,390 --> 07:19,210 to us early has a no entry restriction. 100 07:19,210 --> 07:23,800 Then the truck has to travel to us more and this will lead to more fuel consumption. 101 07:24,040 --> 07:30,610 So this is also a component which you need to consider along with the source and destinations road condition 102 07:30,610 --> 07:32,950 and geography nowadays tarpaulin. 103 07:33,220 --> 07:36,890 See if that is getting certain perishable goods. 104 07:36,910 --> 07:42,010 It is very important for the truck to be covered with tarpaulin which comes with the charge. 105 07:42,040 --> 07:44,840 Then there are toll taxes which has to be paid. 106 07:44,860 --> 07:47,200 Also trucks that I think comes with the charge. 107 07:47,350 --> 07:53,650 Nowadays, the transportation and logistics industry is moving towards automation, so providing the 108 07:53,650 --> 07:58,140 live location to the customer also comes with the charge for jeeps. 109 07:58,150 --> 08:00,490 So these charges also need to be considered. 110 08:00,500 --> 08:06,100 So by understanding and calculating the load freight by yourself, you will be very aware what are the 111 08:06,100 --> 08:10,660 charges you have to bear and what will be the profit of the transporter? 112 08:10,660 --> 08:13,630 Who is earning from you as a service provider? 113 08:13,660 --> 08:19,810 So it is very important if you are a shipper, to understand all these components so that you can book 114 08:19,810 --> 08:22,450 the truck smartly and you can save some money. | ||||
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