CHAPTER 13 DISTRIBUTION STRATEGIES: PHYSICAL DISTRIBUTION AND DOCUMENTATION

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1 CHAPTER 13 DISTRIBUTION STRATEGIES: PHYSICAL DISTRIBUTION AND DOCUMENTATION MULTIPLE CHOICE 1. Air transportation may not lower this cost. a) transportation (X) b) packing c) inventory 2. This transportation mode has the smallest share of total international freight movement. 3. This transportation mode is the fastest-growing mode. 4. This mode of transportation lowers total inventory cost. 5. This is not an advantage of air transportation. a) time in transit b) absolute cost (X) c) delivery schedules d) insurance cost 6. This mode of transportation requires the greatest care in packing. a) air b) rail c) water (X) 7. Sea freight is... when goods are very dense (i.e., low volume per unit of weight). a) high b) inexpensive (X) c) expensive 8. The dominant form of the international transportation of merchandise is a) air b) sea (X) d) rail 9. An association of ocean carriers which join to establish common rules with regard to freight rates and shipping conditions is 1

2 10. Members of this group charge identical shipping rates. 11. This carrier has adopted a dual rate system. 12. This vessel does not operate on a regular route or schedule. a) conference line b) independent line c) tramp line (X) 13. Marine cargo insurance applies to shipments by a) air b) sea c) mail d) all of the above (X) 14. This packing method assembles items into a compact load, provided with skids and cleats for ease of handling. a) palletizing b) unitizing (X) c) cushing d) containerization 15. The freight forwarder does not specialize in a) traffic operations b) government export regulations c) overseas import regulations d) financing (X) e) the forwarder specializes in all of the above 16. Freight forwarders do not perform this function. a) packing advice b) freight rate quotation c) preparation of customs documents d) product pricing (X) e) consolidation of small shipments into a large one 17. This is the international system used to classify exported products. a) Harmonized Tariff Schedule (HS) (X) b) Schedule X c) Schedule A d) Brussels Tariff Nomenclature 18. A formal authorization for U.S. exports is a a) general license b) validated license (X) c) special license d) controlled license 19. Certain strategic goods shipped from the United States to Eastern Europe require a a) general license b) validated license (X) c) special license d) controlled license 20. This is not a purpose of the Shipper's Export Declaration (SED) form. 2

3 a) export control b) statistical information c) boycott monitoring (X) 21. A Shipper's Export Declaration (SED) does not perform this function. a) compilation of statistical information b) export control document c) document of title (X) 22. This document provides a proof of delivery for goods received at the warehouse of the steamship line. a) packing list b) shipper's letter of instructions c) dock receipt (X) d) certificate of registration 23. This kind of invoice is provided prior to the shipment of merchandise to inform the buyer of the kinds, quantities, and value of goods to be sent. a) pro forma invoice (X) b) commercial invoice c) customs invoice d) consular invoice 24. This kind of invoice is a legalized or visaed document prepared by a seller in the importing country's language on an official form. a) pro forma invoice b) commercial invoice c) customs invoice d) consular invoice (X) 25. This document is needed for preferential rates of import duties. a) certificate of origin (X) b) inspection certificate c) special purpose document d) insurance certificate 26. This document certifies that the merchandise was in good condition immediately prior to shipment. a) certificate of origin b) inspection certificate (X) c) special purpose document d) insurance certificate 27. This transport document is not negotiable, enabling a carrier to release goods to a designated consignee without this particular document. a) insurance certificate b) bill of lading c) air waybill (X) 28. A bill of lading does not serve this function. a) document of title b) receipt of goods c) insurance certificate (X) d) contract of carriage 29. This bill of lading is issued when the carrier receives the cargo on the vessel with no evidence of damage. a) foul and on board b) clean and on board (X) c) foul and received for shipment d) clean and received for shipment 3

4 TRUE OR FALSE 1. International logistics costs far exceed those for domestic shipment. (T) 2. Transportation cost is directly related to speed of transportation. (T) 3. It is traditionally believed that the appropriateness of air freight is a function of a value-toweight equation. (T) 4. As product density declines, the charge for sea freight rises rapidly. (T) 5. A conference line company uses a dual rate system. (T) 6. In contrast with independent lines and tramp vessels, conference lines do not have established arrival/departure schedules. (F) 7. Inland carriers are less likely than ocean carriers to bear the responsibility for any damage to goods while in their possession. (F) 8. Marine insurance can be obtained for both air and sea shipments. (T) 9. A special policy is relatively more expensive than open coverage. (T) 10. An exporter who exports frequently should use an open (blanket) insurance policy rather than a special policy. (T) 11. Cargo insurance does not allow profit to be insured. (F) 12. When in doubt, a company should over-pack its product because import duties are based on net weight. (F) 13. Palletizing minimizes breakage by assembling packages on a base and securing the load to the base. (T) 14. Because the cargo can easily be stolen or lost during shipment, a company should discourage theft by clearly writing the company's name and the content on the package for easy identification. (F) 15. A container can minimize breakage and moisture problems but not weight and pilferage problems. (F) 16. A freight forwarder can assist an exporter in virtually all aspects of physical distribution. (T) 17. A freight forwarder generally works for exporters, whereas a customhouse broker works for importers. (T) 18. A freight forwarder's major contribution to an exporter is his ability to provide traffic and documentation responsibilities for international freight movements. (T) 4

5 19. The service of a freight forwarder is optional, and thus its service cost should not be figured into the contract price charged to buyers. (F) 20. A customs broker assists an exporter in filling out export documents. (F) 21. The European Union has eliminated the Single Administrative Document. (T) 22. To fill out export documents, a U.S. exporter needs to use the Harmonized Tariff Schedule. (T) 23. An export license is required for exports being shipped from the United States to Canada. (F) 24. U.S. goods not related to strategic significance or short supply must still have a general export license. (T) 25. The United States requires a validated export license for all exported products. (F) 26. COCOM, an international organization responsible for the coordination of Western allies' export controls for security purposes, has been disbanded. (T) 27. A dock receipt is a document issued by a carrier to evidence shipment transportation. (F) 28. When a regular American invoice is certified by an importing country's consulate, it becomes a consular invoice. (F) 29. An exporter who notes an error on a consular invoice can make corrections by oneself. (F) 30. An inspection certificate is issued by an exporter's own quality control department to certify that the merchandise being shipped conforms to the order or specifications. (F) 31. An air waybill is not a negotiable instrument. (T) 32. A bill of lading can be straight or negotiable. (T) 33. A clean on-board bill of lading is a bill which is properly filled out and notarized. (F) 34. A clean on-board bill of lading certifies that the cargo is in a warehouse at the export dock. (F) 5

P12 Export Documents

P12 Export Documents Types of Export Documentation for Air Freight and Sea Freight Commercial Invoice Packing List Certificate of Origin Bill of Lading Air Waybill Export License/Declaration Commonly Used