A concise introduction to Road Tr anspo r t Presented by Dr. F. Saruchera Learning Objectives: After this session, the student should be acquainted with basic regulations of road transport. S/he should be in a position to state the commonly used vehicles to give information on transport documents for road movements. Furthermore s/he should explain the ec ono mic tariff structure and give examples and how to offer to customers. 1
What is Road Transport? Who are the main Players in Road Transport? 2
Why road transport? This is what the International Road Transport Union (IRU) says … “ The road transport industry is: • … the backbone of strong economies and dynamic societies • … vital to economic growth, social development [and] prosperity and, meeting the demand for the sustainable mobility of both people and goods. (…) 3
• … instrumental in interconnecting all businesses to all major world markets (…) • … crucial [for] the daily economic and social life of industrialised and developing countries alike (…) . “ 4
The Transporter’s role in road transport The transporters / transport managers are actively involved in organizing cargo transports by road; it is the core activity. They: * select the trucks appropriate for the specific type of cargo, * decide on the actual carrier with regard to his reliability, * propose or indicate the transport routes 5
(regarding time and co sts), * mediate and conclude transport contracts, * give instructions to carriers, * execute instructions by consignor with regard to insurance, packaging, warehousing a. s. o., * (sometimes) perform transports as ow n‐name transactions (acting as carrier). 6
Road Tr ansport Management ‐ some key considerations * capacity: truck ’ s gross capacity ranges from 3,5 tons (short haul / city trucks) to 40 tons (long distance trucks) with a net capacity from about 1 ton to 25 tons * (special trucks / heavy load trucks my exceed this limit) * distance: basically trucks can reach any place in the world from any place in the world, it ’ s just a matter of costs and time * costs: relatively high investment for (new) trucks, high 7
fixed costs (depreciation, drivers), variable costs, such as fuel, often volatile * speed: some countries have speed limits for trucks, average speed relatively low (e. g. a ma xi‐ mum of 80 km/h on highways, with an average speed of about 60 - 65 km/h) * safety: medium, lots of truck accidents, quite often cargo is damaged while loading or unloading * environment: the ca rbon‐ footprint of trucks is not very favorable, efforts to improve it are under way 8
Licencing National licencing: Types of licence * standard national licence … e ntitles the holder to carry goods for hire or reward on national operations and to carry your own goods abroad. This will allow you to haul loaded trailers to or from ports * Regional licencing - e.g. SADC, SACU etc 9
*International licencing e.g. EU Community Authorisation Community Authorisation allows drivers to use a single permit for trips between all EC member states. The Authori‐ sation also allows transit traffic through EC member states and to and from non‐member countries. It also allows ca bo‐ tage, i. e. journeys entirely within one other EC member state. (http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1081804820&type=RESOURCES) 10
International licencing (cont ’ d) Mutual licencing between two countries (bi‐l ateral licences) Usually negotiated between countries mutually granting a certain amount of transports per annum for road hauliers of both countries. 11
Preconditions for licensing These apply to basically all types of licences: * good financial standing * professional) fitness and repute * appropriate operating centres * no criminal offences (certificate of good conduct issued by police) 12
Contracts of Carriage in road tr ansport ‐ 1 Contracts of Carriage in road transport basically show the same structure as in any transport business relationship: * shipper >> CC >> carrier – consignee • i. e. direct shipments without integration of forwarder • consignee no direct contracting partner, just benefitting • exception: ex works / fca / fob delivery – consignee paying for main leg of tr ansport >>> right of choosing carrier CC = Contract of Carriage 13
Contracts of Carriage in road transport ‐ 2 * Full shipments, just mediated by forwarder: shipper >> FC >> forwarder – (>> shipper CC with >>) carrier – consignee * i. e. typical forwarder ’ s activity: * just mediating, organizing * no involvement in actual transportation FC = forwarding contract / CC = contract of carriage 14
Contracts of Carriage in road tr ansport ‐ 3 * Full or part shipments with forwarder contracting the carrier: shipper >> FC >> forwarder >> CC >> carrier – consignee * Groupage services organized by forwarder: (several) shippers >> FC >> consolidating (groupage) forwarder >> CC >> (actual) carrier – receiving forwarder – (several) consignees 15
Contents to be considered in individually agreed contracts * definition of services to be covered by contract * issuing of consignment note and/or additional transport related documents * type of truck to be provided by carrier * type of cargo to be transported (esp. if dangerous goods) * number of items and packaging * load units and/or loading devices to be provided by carrier * time and place of actual provision of truck 16
* loading deadlines * loading regulations & responsibilities * hindrances and related measures * special customs related instructions in case of cross ‐bo rder transport 17
* prohibition or allowance of transport on open loading platform * agreement on freight costs and payment * special conditions in case of intermodal transport * liability (both sides) * place of jurisdiction, severability clause (list does not claim completeness of all contract details) 18
The Carrier ’ s promise The carrier promises to transport and deliver the goods in apparent good order and condition to the named destination and consignee , The Shipper ’ s promise while the shipper promises to hand over the goods properly marked and numbered ready for carriage and pay the agreed price for the transport. 19
Legal basis of contracts Laws and regulations * applicable national transport law * applicable international law for road transports 20
Documents in Road Transport *consignment note * optional in some countries (nevertheless advisable for purpose of proof) * mandatory for international transports * function of consignment note basically the same as with every other mode of transport * packing list / loading manifest / bordereau in groupage services 21
* customs documents ‐ export declaration ‐ docume nts for customs supervision * commercial invoice, certificate of origin … * dangerous goods documentation (shippers declaration, specific instructions) * truck & drivers documents ‐ t ransport licence (copy) ‐ insu rance (copy) ‐ dri ver ’ s licence & social security / I.D. card ‐ registration papers for truck 22
The Economics of Road Transport Cost calculation * defining the “ c ost centre s” (any part of the business against which costs are charged) * defining the “ cost units” (a specific item or an order against which costs can be charged. Basic question: To which cost centre or cost unit can the costs in question be allocated directly? 23
Direct costs - a direct cost is one which is attributable directly to a cost centre (or in a narrow sense to a cost unit) . - Items such as fuel, oil, tyres, repairs and maintenance, wages, vehicle insurance and licence fees are typical of costs which can be allocated directly to a vehicle [fleet] cost centre. 24
Indirect costs - These are the costs which cannot be attributed directly to an operating cost centre. - For example, advertising, heat and light, telephone and office salaries costs cannot be allocated specifically to vehicle operations. - They have to be calculated and then spread out over the various departments on a fair and equitable basis. - They are usually called "overheads". Time‐rela ted costs - These costs remain the same no matter how much work the vehicle does. Such costs are not affected by mileage or vehicle activity. 25
For example, a vehicle standing in the depot still costs money. Consequently, many operators call these "standing costs “ . Examples of these costs are drivers' employment costs, vehicle depreciation, licence, insurance, interest on capital and overheads, e.g. • Drivers' employments costs • Vehicle depreciation, or hire/lease costs • I nterest on capital • Overheads. 26
Distance ‐rela ted costs: these costs will vary in relation to the level of activity of the vehicle. They are often called "running costs", for example, fuel, tyres, repairs and maintenance. (Also called “ variable costs ” .) - Dist ance‐ related costs are calculated on a per kilometer basis. 27
Pricing – 1 The total cost calculated for an order consist of the sum of per day costs multiplied by number of days invested in order plus costs per km/ m multiplied by kilomteres/miles driven. Be careful to include “ empty ” kilometres/miles in calculation in order to cover all costs of an order. 28
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