Warehousing

Warehousing is the set of activities that are involved in receiving and storing goods and preparing them for reshipment. Goods are stored in order to create time utility; that is, they are held until they are needed for use and sale. But along with storage, warehousing includes a number of other activities.

Receiving goods. The warehouse accepts delivered goods and assumes responsibility for them.

Identifying goods. Records are made of the quantity of each item received. Items may be marked, coded, tagged for identification.

16. Sorting goods. Delivered goods may have to be sorted before being stored.

17. Dispatching goods to storage. Items must be moved to their own specific storage areas, where they can be found later.

18. Holding goods. The goods are kept in storage under proper protection until needed.

19. Recalling, selecting or picking goods. Items that are to leave the warehouse must be efficiently selected from storage.

20. Marshaling shipments. The items making up each shipment are brought together, and the shipment is checked for completeness. Records are prepared or modified if necessary.

21. Dispatching shipments. Each shipment is packaged suitably and directed to the proper transport vehicle. Shipping and accounting documents are prepared.

A firm may either use its own warehouses or rent space in public warehouse. A private warehouse, owned and operated by a particular firm, can be designed to serve the firm's specific needs. However, the firm must take on the task of financing the facility, determining the best location for it, and ensuring that it is fully utilized. Generally only firms that deal in large quantities of goods can justify private warehouses.

Public warehouses offer their services to all individuals and firms. Most of them are huge, one-story structures on the outskirts of major cities, where rail and truck transportation are easily available.

There are various types of Customs warehouses, private Customs warehouses being the most appropriate for distribution centres. If goods are consigned to a private Customs warehouse, neither Customs duties, excise duties nor VAT are charged.

Private Customs warehouses may be set up in any locality, for any type of goods and whatever their value, origin or final destination. Customs officers are not present in the warehouse, except for periodic controls.

The warehousekeeper is required to keep stock records. Records kept for commercial or tax purposes contain all the information necessary for control purposes and it is possible for the Customs to check that information, the Customs authorities approve those records for Customs.

Transportation of Goods

Transportation is the shipment of products to consumers or buyers. The greater the distance between seller and purchaser, the more important is the choice of the means of transportation and the particular carrier.

Firms that offer transportation services are called carriers. A common carrier is a transportation firm whose services are available to all shippers^ Railroads, airlines and most long-distance trucking firms are common carriers^ A contract carrier is a transportation firm that is available for hire by one or several shippers. Contract carriers do not serve the general public. Moreover, the number of firms they can handle at any one time is limited by law. A private carrier is one that is owned and operated by the shipper.

In addition, a shipper can hire agents called freight forwarders to handle its transportation. Freight forwarders pick up shipments from the shipper, ensure that the goods are loaded onto a selected carrier, and assume responsibility for the safe delivery of the shipment to its destination. Freight forwarders are often able to group a number of small shipments into one large load (which is carried at a lower rate). This, of course, saves money for shippers.

The two prime elements in choosing a particular mode of transportation - whether railroad, truck, pipeline, or another - are the product itself and the firm's overall distribution system. For some combinations of these two elements, the cost of transportation may be most important. For other combinations, speed may be uppermost. Other factors that enter into this decision are the reliability of the various modes of transportation, their availability at points of shipment and delivery, and their ability to handle particular kinds of shipments.

In terms of total freight carried, railroads are the most important mode of transportation. They are also the least expensive for many products. Almost all railroads are common carriers.

Freight services are also provided by liners and tramp ships. Liners provide services over definite routes, operate in accordance with schedules and call at regular ports. Tramp vessels go anywhere as long as cargo offered in sufficient quantity [Shipments by tramp vessels are governed by an agreement between the carrier and the charterer called a "charter party"/] When striking a deal seller and purchaser sign a contract. As a rule a contract contains a number of clauses, such as: legal title of contracting parties, subject of the contract, quality, price, delivery and payment terms, guarantee, packing and marking, transport. The clause defining transport conditions specifies terms of delivery (FAS, C&F, For/Fot, ex works and others), mode of shipment and responsibilities of each party.

Either shipper or consignee, depending on the terms of the contract, pays freight, loading, discharging and other expenses, if any.