Home All Posts COMMERCE STUDY NOTES FORM THREE TOPIC 1-2.

COMMERCE STUDY NOTES FORM THREE TOPIC 1-2.

TOPIC 1: Transportation
The Meaning of the Term Transportation
Define the term transportation
Transport or transportation
is the movement of people, animals and goods from one location to
another. Modes of transport include air, rail, road, water, cable,
pipeline and space. The field can be divided into infrastructure,
vehicles and operations. Transport is important because it enables trade
between persons, which is essential for the development of
civilizations.
Transport
infrastructure consists of the fixed installations including roads,
railways, airways, waterways, canals and pipelines and terminals such as
airports, railway stations, bus stations, warehouses, trucking
terminals, refuelling depots (including fuelling docks and fuel
stations) and seaports. Terminals may be used both for interchange of
passengers and cargo and for maintenance.
Vehicles
travelling on these networks may include automobiles, bicycles, buses,
trains, trucks, people, helicopters, watercraft, spacecraft and
aircraft. Operations deal with the way the vehicles are operated, and
the procedures set for this purpose including financing, legalities and
policies. In the transport industry, operations and ownership of
infrastructure can be either public or private, depending on the country
and mode.
Passenger
transport may be public, where operators provide scheduled services, or
private. Freight transport has become focused on containerization,
although bulk transport is used for large volumes of durable items.
Transport plays an important part in economic growth and globalization,
but most types cause air pollution and use large amounts of land. While
it is heavily subsidized by governments, good planning of transport is
essential to make traffic flow and restrain urban sprawl.
ESSENTIALS OR ELEMENTS OF TRANSPORTY SYSTEM
  1. The
    way. Natural ways are cheap and free, and have no maintenance costs
    unless we try to improve them artificially. The sea, the air, the
    rivers, and footpaths are all natural ways. Being natural they are
    subject to the whims of nature, and this often requires, that they be
    improved artificially. Rivers are subject to controls to prevent
    flooding in wet periods and insufficient flow in dry periods.They are
    dredged to maintain a channel and locks are built to improve navigation
    in the upper reaches, Bridle paths are made up and turned into roads.
    Highways and motorways, canals, railways, tramways tunnels, and
    monorails are similarly constructed. Clearly these are not free’ like
    may be borne socially rather than privately. If the costs are borne by
    the ratepayer and taxpayer we may have what is an apparently free way
    built the owner usually has sole use of it. This owner then charges for
    its use by other persons, to recoup the capital costs.
  2. The unit
    of carriage. Whatever we call it, some vehicle or craft must be used in
    transport. The efficiency of the mode of transport depends to some
    extent on the flexibility and adaptability of the unit of carriage used.
    Road vehicles are adaptable than railways rolling stock because they
    are not entirely tied to the way: aircraft and ships are even less
    tightly bound by the way on which they travel.Even a pipeline can be
    considered as unit of carriage. It is not very adaptable in its
    behaviour: we cannot expect it to carry gas until noon, milk from noon
    till 3 p.m., and petrol from 3 p.m. to midnight. In choosing our method
    of transport the adaptability of the unit of carriage will be a major
    consideration.
  3. The motive power unit. Every vehicle must be
    driven and the choice of a propulsion unit depends upon the strength of
    the vehicle, the speed required, the available fuel, and other factors.
    Today the steam engine, the first great prime mover, has been largely
    replaced by the petrol engine, the jet engine, the diesel engine and the
    electric motor.
  4. The terminal. Nearly every journey involves
    junctions where we can transfer from one form of transport to another. A
    port is usually regarded as a terminal for ships, but in fact it is
    also a terminal for trains, roads, pipelines, and aircraft.
IMPORTANCE OF TRANSPORTATION
  1. Makes
    available goods to customers: Transport makes possible movement of
    goods from one place to another with great ease and speed. Thus,
    consumers spread in different parts of the country have the benefit of
    consuming goods produced at distant places.
  2. Helps in creation of
    employment: Transport provides employment opportunity to individuals as
    drivers, conductors, pilots, cabin crew, captain of the ship, etc. who
    are directly engaged in transport business. It also provides employment
    to people indirectly in the industries producing various means of
    transport and other transport equipments.
  3. Transport is a key
    necessity for specialization—allowing production and consumption of
    products to occur at different locations. Transport has throughout
    history been a spur to expansion; better transport allows more trade and
    a greater spread of people. Economic growth has always been dependent
    on increasing the capacity and rationality of transport.
  4. Transport
    improvement is not always the best way to improve productivity or
    increase economic development. In general, such improvements only
    increase economic development where inadequate transport is a
    significant constraint on economic activity. An area that lacks paved
    roads may experience significant economic growth from a new highway or
    bridge that significantly reduces travel costs, but once an area has
    basic highway access, each increase in highway capacity tends to provide
    less overall benefit.
  5. Price stabilization: by transporting
    goods from place of scarcity, various means of transport help in the
    equalization of price of goods and services in many places.
FEATURES OF GOOD MEANS OF TRANSPORT
  • Adequate
  • Safe
  • Economical
  • Reliable
The Different Modes of Transport (Road Transport, Railway, Water, Air and Pipe-line)
Explain the different modes of transport (road transport, rail way, water, air and pipe-line)
MODE OF TRANSPORT: is
a term used to distinguish substantially different ways to perform
transport. The most dominant modes of transport are aviation, ship
transport, and land transport, which includes rail, road and off-road
transport. Other modes also exist, including pipelines, cable transport,
and space transport. Human-powered transport and animal-powered
transport are sometimes regarded as their own mode, but these normally
also fall into the other categories. Each mode of transport has a
fundamentally different technological solution, and some require a
separate environment. Each mode has its own infrastructure, vehicles,
and operations, and often has unique regulations. Each mode also has
separate subsystems. A subsystem is a group of many parts that make up
one part. All modes of transportation have 6 subsystems: Propulsion,
Suspension, Control, Guidance, Structural, and Support. Transport using
more than one mode is described as intermodal. Transportation that
carries around many people and can be used by the public is known as
Mass Transportation.
Generally there are three forms of transportation:
1. Land transport: also referred to as ground transport or ground transportation,
is the transport or movement of people, animals, and goods from one
location to another on land, usually by rail or road. Involves roads,
railways, and pipeline.
The Advantages of Each of the Modes
Point out the advantages of each of the modes
Road transport: involve the use of vehicles, bicycles and motorcycles in moving of goods and passengers.
Importance of road transport
  1. Less Capital Outlay:
    Road transport required much less capital Investment as compared to
    other modes of transport such as railways and air transport. The cost of
    constructing, operating and maintaining roads is cheaper than that of
    the railways. Roads are generally constructed by the government and
    local authorities and only a small revenue is charged for the use of
    roads.
  2. Door to Door Service: The outstanding
    advantage of road transport is that it provides door to door or
    warehouse to warehouse service. This reduces cartage, loading and
    unloading expenses.
  3. Service in Rural Areas:
    Road transport is most suited for carrying goods and people to and from
    rural areas which are not served by rail, water or air transport.
    Exchange of goods, between large towns and small villages is made
    possible only through road transport.
  4. Flexible Service:
    Road transport has a great advantage over other modes of transport for
    its flexible service, its routes and timings can be adjusted and changed
    to individual requirements without much inconvenience.
  5. Suitable for Short Distance:
    It is more economic and quicker for carrying goods and people over
    short distances. Delays in transit of goods on account of intermediate
    loading and handling are avoided. Goods can be loaded direct into a road
    vehicle and transported straight to their place of destination.
  6. Lesser Risk of Damage in Transit:
    As the intermediate loading and handling is avoided, there is lesser
    risk of damage, breakage etc. of the goods in transit. Thus, road
    transport is most suited for transporting delicate goods like chinaware
    and glassware, which are likely to be damaged in the process of loading
    and unloading.
  7. Saving in Packing Cost: As
    compared to other modes of transport, the process of packing in motor
    transport is less complicated. Goods transported by motor transport
    require less packing or no packing in several cases.
  8. Rapid Speed:
    If the goods are to be sent immediately or quickly, motor transport is
    more suited than the railways or water transport. Water transport is
    very slow. Also much time is wasted in booking the goods and taking
    delivery of the goods in case of railway and water transport.
  9. Less Cost:
    Road transport not only requires less initial capital investment, the
    cost of operation and maintenance is also comparatively less. Even if
    the rate charged by motor transport is a little higher than that by the
    railways, the actual effective cost of transporting goods by motor
    transport is less. The actual cost is less because the motor transport
    saves in packing costs and the expenses of intermediate loading,
    unloading and handling charges.
  10. Private Owned Vehicles:
    Another advantage of road transport is that big businessmen can afford
    to have their own motor vehicles and initiate their own road services to
    market their products without causing any delay.
  11. Feeder to other Modes of Transport:
    The movement of goods begins and ultimately ends by making use of
    roads. Road and motor transport act as a feeder to the other modes of
    transport such as railways, ships and airways.
Disadvantages:
In spite of various merits, road/motor has some serious limitations:
  1. Seasonal Nature:Motor transport is not as reliable as rail transport. During rainy or flood season, roads become unfit and unsafe for use.
  2. Accidents and Breakdowns:There
    are more chances of accidents and breakdowns in case of motor
    transport. Thus, motor transport is not as safe as rail transport.
  3. Unsuitable for Long Distance and Bulky Traffic:This mode of transport is unsuitable and costly for transporting cheap and bulky goods over long distances.
  4. Slow Speed:The speed of motor transport is comparatively slow and limited.
5. Lack of Organisation:
The
road transport is comparatively less organised. More often, it is
irregular and undependable. The rates charged for transportation are
also unstable and unequal.
Railway transport:
involve the carrying of goods and passengers by trains. Railways
transport industries is owned by the Tanzania railway authority (TRA)
which operate central area Tanga lines as well as TANZANIA ZAMBIA
RAILWAY AUTHORLITY (TAZARA) which operate services from Dar es Salaam to
tunduma-Tanzania then to Kampiliposhi-Zambia.
Advantages:
  1. It facilitate long distance travel and transport of bulky goods which are not easily transported through motor vehicles.
  2. It is a quick and more regular form of transport because it helps in the transportation of goods with speed and certainty.
  3. It helps in the industrialization process of a country by easy transportation of coal and raw-materials at a cheaper rate.
  4. It helps in the quick movement of goods from one place to another at the time of emergencies like famines and scarcity.
  5. It encourages mobility of labour ad thereby provides a great scope for employment.
  6. Railway
    is the safest form of transport. The chances of accidents and breakdown
    of railways are minimum as compared to other modes of transport.
    Moreover, the traffic can be protected from the exposure to sun, rain
    snow etc.
  7. The carrying capacity of the railways is extremely
    large. Moreover, its capacity is elastic which can easily be increased
    by adding more wagons.
  8. It is the largest public undertaking in
    the country. Railways perform many public utility services. Their
    charges are based on charge what the traffic can bear principles which
    helps the poor. In fact, it is a national necessity.
DEMERITS:
  1. The
    railway requires a large investment of capital. The cost of
    construction, maintenance and overhead expenses are very high as
    compared to other modes of transport. Moreover, the investments are
    specific and immobile. In case the traffic is not sufficient, the
    investments may mean wastage of huge resources.
  2. Another
    disadvantages of railway transport is its inflexibility. It routes and
    timings cannot be adjusted to individual requirements.
  3. Rail
    transport cannot provide door to door service as it is tied to a
    particular track. Intermediate loading or unloading involves greater
    cost, more wear and tear and wastage of time. The time cost of terminal
    operations are a great disadvantage of rail transport.
  4. As
    railways require huge capital outlay, they may give rise to monopolies
    and work against public interest at large. Even if controlled and
    managed by the government, lack of competition may breed in inefficiency
    and high costs.
  5. Railway transport is unsuitable and uneconomical for short distances and small traffic of goods.
  6. It involves much time and labour in booking and taking delivery of goods through railways as compared to motor transport.
  7. Because
    of huge capital requirements and traffic, railways cannot be operated
    economically in rural areas. Thus, large rural areas have no railway
    even today. This causes much inconvenience to the people living in rural
    areas.
Air transport:
This involves the movement of goods and passengers by aeroplanes.In
Tanzania, the air transport industry is operated by both the public and
private sectors which are Air Tanzania company Ltd (ATCL), Precision air
fast jet etc
MERITS:
  1. High Speed:
    The supreme advantage of air transport is its high speed. It is the
    fastest mode of transport and thus it is the most suitable mean where
    time is an important factor.
  2. Comfortable and Quick Services: It provides a regular, comfortable, efficient and quick service.
  3. No Investment in Construction of Track: It does not require huge capital investment in the construction and maintenance of surface track.
  4. No Physical Barriers: It follows the shortest and direct route as seas, mountains or forests do not come in the way of air transport.
  5. Easy Access: Air transport can be used to carry goods and people to the areas which are not accessible by other means of transport.
  6. Emergency Services:
    It can operate even when all other means of transport cannot be
    operated due to the floods or other natural calamities. Thus, at that
    time, it is the only mode of transport which can be employed to do the
    relief work and provide the essential commodities of life.
  7. Quick Clearance: In air transport, custom formalities can be very quickly complied with and thus it avoids delay in obtaining clearance.
  8. Most Suitable for Carrying Light Goods of High Value:
    It is most suitable for carrying goods of perishable nature which
    require quick delivery and light goods of high value such as diamonds,
    bullion etc. over long distances.
  9. National Defence:
    Air transport plays a very important role in the defence of a country.
    Modern wars have been fought mainly by aeroplanes. It has upper hand in
    destroying the enemy in a very short period of time. It also supports
    over wings of defence of a country.
In spite of many advantages, air transport has the following limitations:
  1. Very Costly: It is the costliest means of transport. The fares of air transport are so high that it is beyond the reach of the common man.
  2. Small Carrying Capacity: Its carrying capacity is very small and hence it is not suitable to carry cheap and bulky goods.
  3. Uncertain and Unreliable:
    Air transport is uncertain and unreliable as it is controlled to a
    great extent by weather conditions. Unfavourable weather such as fog,
    snow or heavy rain etc. may cause cancellation of scheduled flights and
    suspension of air service.
  4. Breakdowns and Accidents:
    The chances of breakdowns and accidents are high as compared to other
    modes of transport. Hence, it involves comparatively greater risk.
  5. Large Investment:
    It requires a large amount of capital investment in the construction
    and maintenance of aeroplanes. Further, very trained and skilled persons
    are required for operating air service.
  6. Specialised Skill: Air transport requires a specialised skill and high degree of training for its operation.
  7. Unsuitable for Cheap and Bulky Goods: Air transport is unsuitable for carrying cheap, bulky and heavy goods because of its limited capacity and high cost.
  8. Legal Restrictions: There are many legal restrictions imposed by various countries in the interest of their own national unity and peace.
Water transport: This involves the movement of goods and passengers by sea,canals,rivers, and lakes.
Advantages of water transport:
  1. Low Cost:Rivers
    are a natural highway which does not require any cost of construction
    and maintenance. Even the cost of construction and maintenance of canals
    is much less or they are used, not only for transport purposes but also
    for irrigation, etc. Moreover, the cost of operation of the inland
    water transport is very low. Thus, it is the cheapest mode of transport
    for carrying goods from one place to another.
  2. Larger Capacity:It can carry much larger quantities of heavy and bulky goods such as coal, and, timber etc.
  3. Flexible Service:It provides much more flexible service than railways and can be adjusted to individual requirements.
  4. Safety:The risks of accidents and breakdowns, in this form of transport, are minimum as compared to any other form of transport.
Disadvantages of water transport:
  1. Slow:Speed
    of Inland water transport is very slow and therefore this mode of
    transport is unsuitable where time is an important factor.
  2. Limited Area of Operation:It can be used only in a limited area which is served by deep canals and rivers.
  3. Seasonal Character:Rivers
    and canals cannot be operated for transportation throughout the year as
    water may freeze during winter or water level may go very much down
    during summer.
  4. Unreliable:The inland water
    transport by rivers is unreliable. Sometimes the river changes its
    course which causes dislocation in the normal route of the trade.
  5. Unsuitable for Small Business:Inland
    water transport by rivers and canals is not suitable for small traders,
    as it takes normally a longer time to carry goods from one place to
    another through this form of transport.
Containerization is a system of intermodal freight transport using intermodal containers (also called shipping containers and ISO containers)
made of weathering steel. The containers have standardized dimensions.
They can be loaded and unloaded, stacked, transported efficiently over
long distances, and transferred from one mode of transport to
another—container ships, rail transport flatcars, and semi-trailer
trucks—without being opened. The handling system is completely
mechanized so that all handling is done with cranes and special forklift
trucks. All containers are numbered and tracked using computerized
systems.
The
system, developed after World War II, dramatically reduced transport
costs, supported the post-war boom in international trade, and was a
major element in globalization. Containerization did away with the
manual sorting of most shipments and the need for warehousing. It
displaced many thousands of dock workers who formerly handled break bulk
cargo. Containerization also reduced congestion in ports, significantly
shortened shipping time and reduced losses from damage and theft.
The Benefits of Containerization
The benefits of containerization take place over three main dimensions:
  • Transport costs.
    The main transports costs benefits of containerization are jointly the
    outcome of lower transhipment costs and economies of scale applied to
    maritime shipping and terminal operations. Since containerized cargo is
    subject to less damage as well as lower theft levels, insurance rates
    are generally lower. Another significant benefit is that the container
    itself becomes the minimal load unit, implying that a wider range of
    exporters and importers can get access to international markets as the
    minimal entry unit, a single container load, becomes affordable.
  • Service level.
    Containerized transport chains tend to be more reliable since the modes
    involved are more consistent in their service timeframe. Intermodal
    operations are much faster, implying that the same assets can be used
    more frequently. Containerized services have therefore a higher service
    frequency, which facilitates supply chain management.
Difference between Various Transport Documents
Distinguish the various transport documents
The main documents used in Transportation.
Bill of lading
  • The bill of lading is the most important export document whenever goods are sent by ship. It is issued by the shipping company.
  • The key information in a bill of lading (See diagram of a bill of lading below) is as follows:
  • (a)
    The name of the shipping company.(b) The name of the shipper
    (beneficiary) or his agent.(c) The name of the carrying vessel. (d) The
    names of the ports of shipment and discharge. (e) The identification
    (shipping) marks and numbers.(f) The number of containers, cases,
    packages or individual items. (g) A description of the goods in general
    terms consistent with the description of the goods in the letter of
    credit. (h) Evidence that the goods have been received for shipment or
    shipped (loaded) on board and its date. (i) The name of the consignee
    (if not made out ‘to order’) and also the name and address of the
    ‘notify party’ wherever applicable. (j) Whether freight has been prepaid
    or payable at destination. (k) The number of originals issued (A bill
    of lading is normally issued in a set of three originals; anyone of
    which may be used to take delivery and possession of goods. It is
    important that the consignee must secure all the originals.) (1) The
    date of issuance and the signature of the ship’s master or the carrier
    or his agent.
  • 3. Bills of lading are normally issued in a ‘set’
    of two or more transferable copies, all of which must be signed by the
    master of the ship who makes a note on the bills of lading, of the
    number of copies issued and any damages to the goods taken on board. He
    then keeps one copy for reference. The other copies are sent to the
    foreign importer by separate mail or returned to the exporter
    (consignor).
  • 4. However, if the exporter has arranged for the
    importer to open a letter of credit in the exporter’s favour in a local
    bank, then the bills of lading together with the other shipping
    documents such as the invoice, the consular invoice, the marine
    insurance policy and a certificate of origin must be lodged by the
    exporter at the local bank, together with the bill of exchange.
  • 5.
    It is one of the documents that have to be submitted to the advising
    bank before the shipper can secure payment in the letter of credit.
  • 6.
    The functions of a bill of lading are as follows:(a) It acts as an
    advice note indicating the quantity and description of goods sent by a
    named ship. (b) It is a receipt of goods in good condition on board,
    signed by the master of the ship. Any damage to goods is noted. (c) It
    is evidence of a contract of carriage between the shipper and the ship
    owner. (d) (i) It is a document of title to goods described therein.
    This means that the holder of the bill of lading can claim the goods
    when he hands it over to the Port Authority at the port of discharge.
    (ii) When delivery of goods has taken place, all other copies of the
    bill of lading are rendered invalid.(e) Since it is a document of title
    it can be used as a basis for negotiating for a letter of credit from
    the bank. (f) (i) It informs the customs authorities of the type of
    imports/exports and the country of origin or destination respectively.
    (ii) It allows the customs to see at a glance whether the imports or
    exports are taxable. (iii) It helps in the recording of statistics.(g)
    It may be used as a document in support in the event of an insurance
    claim.
A
bill of lading is used whenever goods are sent by ship. It is signed by
the master of the ship or by an agent on behalf of the shipping
company. The description of the goods should be consistent with the
other documents such as the invoice, insurance policy, etc. Freight
charges are to be calculated by the shipping company. <!– [if !supportLineBreakNewLine]–> <!–[endif]–>
Consignment note / Delivery note;
  • 1.
    It is sometimes called a rail and road consignment note or a delivery
    note. It is normally prepared by the road/rail transport company or a
    freight forwarder.
  • 2. The key information in a consignment
    note/delivery note (See diagram of a delivery note below) is as follows:
    (a) The name and address of the sender (consignor). (b) The name and
    address of the recipient (consignee). (c) The number of packages or
    cases. (d) The marks and numbers on the packages or cases. (e) A brief
    description of the goods. (f) The place of departure and the date of
    departure. (g) The time of collection and delivery, (h) The time of
    arrival. (i) The type of haulier and the vehicle number. (j) The
    signature of the carrier, (if it’s a Rail Consignment Note, it is
    stamped by the Station master). (k) The freight charged.
  • 3. The
    functions of a delivery note are as follows: (a) This is an advice note,
    indicating the quantity and description of goods being dispatched on a
    certain date by the named road or rail transport agency. (b) It is
    evidence of a contract of carriage but is not negotiable. (c) It is not a
    document of title but should be dispatched with other documents for it
    shows the date of dispatch of the goods which is useful for exchange and
    import control purposes. (d) It is a receipt for goods and a document
    for delivery. (e) It is also on a note of freight charges.
Airway bill/Air consignment note
  • 1. An airway bill is a very important document used whenever goods are sent by air.
  • 2.
    An airway bill is issued by an airline company in a set of 12 copies.
    However, only three copies are originals — the first is for the carrier,
    the second for the consignee and the third is for the shipper. The
    balance 9 (nine) copies are retained by the airline company for
    administrative purposes. It corresponds to a BJ1 of Lading but it is
    only used when goods are sent by air.
  • 3. The key information in
    an airway bill is as follows: (a) The name of the Airline Company or
    carrier. (b) The name and address of the shipper (beneficiary). (c) The
    names of the airports of departure and destination, flight number and
    actual flight date. (d) A description of the goods in general terms, its
    weight and the freight charged, its declared value (c) The number of
    pieces sent. (f) Evidence (by and authorized signature) that the goods
    have been received by the carrier or its agent, and the date of
    issuance. (g) The name and address of the consignee and also the name
    and city of the carrier or its agent. (h) The status of the freight
    charges prepaid or payable at destination.
  • 4. It is normally
    prepared in triplicate by the consignor. The part marked for the
    ‘Carrier’ has to be signed by the consignor. The part marked for the
    ‘Consignee’ travels with the goods. The third part is signed by the
    carrier and returned to the consignor.
  • 5. The consignee is
    usually the bank that issues the letter of credit, and the party to be
    notified when the goods arrive is the importer.
  • 6. The functions
    of an airway bill are as follows:(a) It is an advice note indicating
    all the key information stated above. (b) It is evidence of contract of
    carriage but it is not negotiable. (c) It is not a document of title.
    The delivery of goods is not dependent upon the presentation of the
    Airway Bill but rather the goods will be delivered to the named
    consignee against proof of identification at the airport of destination.
    (d) It should be dispatched with other documents for it shows the date
    of dispatch which is useful for exchange and import control purposes.
    (e) It may be used as a receipt to be signed by the consignee on the
    delivery of the goods. (f) It is also a note of freight charges.
Packing list and Weight note
  1. These
    two documents are normally combined together. The weight note shows the
    gross weight and net weights of the goods. These must agree with that
    stated in other relevant documents such as the bill of lading.
  2. The
    key information in a packing list (See diagram of a packing list below)
    is as follows: (a) The name and address of the shipper. Generally it is
    prepared by the shipper using his letterhead. (b) The name and address
    of the consignee. (c) The name of the ship. (d) The port of departure
    and port of destination. (e) The marks and numbers on the packages or
    cases. (f) The number of packages. (g) A general description of the
    goods. (h) The gross and net weight of the goods, (i) The date of
    issuance and the invoice number. (j) The signature of the shipper or the
    agent as a verification of all the above information.
  3. The
    functions of a packing list are as follows: (a) This may be one of the
    documents that have to be submitted to the advising bank, together with
    the other relevant shipping documents such as the Bill of Lading, etc.
    according to the terms of the letter of credit before the shipper can
    secure payment. (b) It serves as a verification of important information
    of the goods shipped or transported by road haulage such as gross and
    net weight of the goods, details of the packaging, description of the
    goods as agreed upon in the contract of sale between the importer and
    exporter. These details must agree with that in the other documents,
    e.g. the bill of lading.
Goods received note/Cargo receipt
  1. The
    key information in a goods received note (See diagram of a goods
    received note below) are as follows: (a) The name and address of the
    consignee or his authorized agent who is claiming delivery and
    possession of the goods. (b) The description of the goods. (c) The
    number of packages of cases claimed. (d) The unit price. (e) The total
    value of the cargo claimed. (f) The date of issuance. (g) The signature
    of the consignee or its authorized agent. (h) The condition of the goods
    upon receipt.
  2. The functions of the goods received note are as
    follows: (a) The acknowledgement of receipt of goods at the port of
    destination by the consignee or its authorized agent. (b) The
    undertaking by the consignee that the goods were received in good order
    and according to the contract, thus absolving the ship owner or the port
    authorities from any liability to later claims for damage or theft.
Various Factors that Determine Choice of Mode of Transport
Explain the various factors that determine choice of mode of transport
FACTORS TO BE CONSIDERED IN CHOOSING A MEANS OF TRANSPORT.
  1. Cost of Service:The
    cost of transportation adds to the cost of the goods so it should
    always be kept in mind. Rail transport is comparatively a cheaper mode
    of transport for carrying heavy and bulky traffic over long distances.
    Motor transport is best suited and economical to carry small traffic
    over short distances. Motor transport saves packing and handling
    costs.Water transport is the cheapest mode of transport. It is suitable
    to carry only heavy and bulky goods over long distances where time is
    not an important factor. Air transport is the most costly means of
    transport but is particularly suited for carrying perishable, light and
    valuable goods which require quick delivery.
  2. Speed of Transport:Air
    transport is the quickest mode of transport but it is costliest of all.
    Motor transport is quicker than railways over short distances. However,
    the speed of railways over long distances is more than that of other
    modes of transport except air transport and is most suitable for long
    distances. Water transport is very slow and thus unsuitable where time
    is an important factor.
  3. Flexibility:Railways,
    water and air transport are inflexible modes of transport. They operate
    services on fixed routes and at replanted time schedules. The goods have
    to be carried to the stations, ports and airports and then taken from
    there. Motor transport provides the most flexible service because it is
    not tied to fixed routes or time schedules. It can operate at any time
    and can reach the business premises for loading and unloading.
  4. Regularity of Service:Railway
    service is more certain, uniform and regular as compared to any other
    mode of transport. It is not much affected by weather conditions. On the
    other hand, motor transport, ocean transport and air transport are
    affected by bad weather such as heavy rains, snow, fog, storms etc.
  5. Safety:Safety
    and security of goods in transit also influence the choice of a
    suitable means of transport. Motor transport may be preferred to railway
    transport because losses are generally less in motor transport. Water
    transport exposes the goods to the perils of sea and, hence from safety
    point of view, sea transport is thought of as a last resort.
  6. Nature of Commodity:Rail
    transport is most suitable for carrying cheap, bulk and heavy goods.
    Perishable goods which require quick delivery may be carried through
    motor transport or air transport keeping in mind the cost and distance.
  7. Other Considerations:A
    number of special services such as warehousing, packing, loading and
    unloading are also taken into consideration while deciding about a mode
    of transport. From the above discussion it is clear that each mode of
    transport is suited for a particular type of traffic.The rail transport
    is particularly suited for carrying heavy and bulky goods over long
    distances. Motor transport is suitable for carrying small consignments
    over short distances. Air transport is suited to light and precious
    articles which are to be delivered quickly. Ocean transport is
    appropriate for carrying heavy bulky goods over long distances at the
    cheapest possible cost.
Exercise 1
QUIZ
  • Describe the advantages of transportation.
  • Mention and explain advantages of containerization.

 TOPIC 2: Communication 

Communication
Mening of the Term Communication
Define the term communication
Communication
is the transmission of information from one point or person to another
point or person. Involves two-way process of reaching mutual
understanding, in which participants not only exchange (encode-decode)
information, news, ideas and feelings but also create and share meaning.
In general, communication is a means of connecting people or places. In
business, it is a key function of management–an organization cannot
operate without communication between levels, departments and employees.
See also communications.
Communication
is a function that is indispensable for commerce. All types of trade
transactions, receiving of trade inquiries, sending of information about
dispatch of goods, receiving of payment, etc.
” Communication is a
function that is indispensable for commerce. All types of trade
transactions, receiving of trade inquiries, sending of information about
dispatch of goods, receiving of payment, etc. are possible with the
help of Communication
Trade
business cannot function efficiently if the buyers and sellers do not
make proper use of communication channels. It is through communication
that all formalities of transaction are completed. An efficient
communication system brings businessman close to each other not only in
one country but in the whole world.
Management
and supervision also remain incomplete and shabby in the absence of
proper communication. Communication means sharing of ideas in common.
When we communicate, we are trying to establish a rationale with
someone. We are trying to share information, ideas or attitudes.
Communication is basically the fine-tuning of the receiver and the
sender, aimed at affecting a particular message.
The Nature of Communication
Explain the nature of communication
Seven
major elements of communication process are: (1) sender (2) ideas (3)
encoding (4) communication channel (5) receiver (6) decoding and (7)
feedback.
Communication
may be defined as a process concerning exchange of facts or ideas
between persons holding different positions in an organisation to
achieve mutual harmony. The communication process is dynamic in nature
rather than a static phenomenon.
Communication
process as such must be considered a continuous and dynamic
inter-action, both affecting and being affected by many variables.
  1. Sender:
    The person who intends to convey the message with the intention of
    passing information and ideas to others is known as sender or
    communicator.
  2. Ideas: This is the subject matter of the
    communication. This may be an opinion, attitude, feelings, views,
    orders, or suggestions.
  3. Encoding: Since the subject matter of
    communication is theoretical and intangible, its further passing
    requires use of certain symbols such as words, actions or pictures etc.
    Conversion of subject matter into these symbols is the process of
    encoding.
  4. Communication Channel: The person who is interested in
    communicating has to choose the channel for sending the required
    information, ideas etc. This information is transmitted to the receiver
    through certain channels which may be either formal or informal.
  5. Receiver:
    Receiver is the person who receives the message or for whom the message
    is meant for. It is the receiver who tries to understand the message in
    the best possible manner in achieving the desired objectives.
  6. Decoding:
    The person who receives the message or symbol from the communicator
    tries to convert the same in such a way so that he may extract its
    meaning to his complete understanding.
  7. Feedback: Feedback is the
    process of ensuring that the receiver has received the message and
    understood in the same sense as sender meant it.
Importance of Communication to Business
Show the importance of communication to business
The Importance of Communication in Business
Imagine
trying to run a business where no one of your staff communicates with
each other. Departments would be out of sync, no one would be quite
certain what was going on, and it would be impossible to work together
on group projects. In other words, a lack of communication would cause
serious efficiency problems, and at the end of the day that’s money out
of the company’s pockets. Taking the time to keep everyone in the loop
fixes all these issues, and for that reason it’s absolutely essential
for every company to stress communication.
Unity
A
company that works to develop strong communication with each other is a
united company. Each team member shares the same goals in this case,
and everyone knows what their co-workers have on their plate. By simply
keeping in touch on a regular basis, everyone remains united and working
together. This instils a cooperative atmosphere rather than encouraging
the idea of having a bunch of individual people only looking out for
themselves. All companies have a vision for their success, and through
communication, that vision spreads to everyone. The result is a happier,
healthier workplace where things get done more efficiently and a bigger
likelihood of retaining the top talent.
Feedback
When
communication is stressed, it creates an open environment where
everyone feels comfortable talking with each other. When that level of
comfort is present in a business, employees feel confident that they can
express their ideas about the work process to each other and even to
management. Feedback is a vital component of communication, and it works
both ways. Management give feedback to the employees in regards to how
well they’re faring at their duties, and employees feel safe giving
feedback on how well the company’s policies and procedures are working.
Communication is not communication if it only comes from one direction.
Improves Customer Relationships
No
business would succeed without customers, and every company exists to
serve them. Communicating with customers is every bit as important as
communication within the workplace. Thankfully, this is easier today
that it’s ever been, as there are a wide variety of ways to keep in
touch with your customer base. Consider this course on connecting with
your customer base through blogging for one method, but no matter what
method you use to reach out to your customers, keeping constant
communication going will bring your company much closer with the ones
that spend the money on your products or services.
Furthermore,
this type of communication also ensures your customers remain happy
with you, since they can share their needs with you and make suggestions
on what you can do to better serve them. When customers feel they are
listened to and that their suggestions are implemented accordingly, the
reputation of your business will grow and you will find yourself
generating additional profit, not to mention that you will have more and
more customers to communicate with.
It
isn’t just sales that customer communication helps, however.
Communication is perhaps even more essential when it comes to providing
excellent customer service, something that any successful company must
do. For any number of reasons, customers are not always happy with your
company even if you did everything you could, but as long as you are
able to communicate your concern for their satisfaction, you can turn
any situation into a positive experience. Customers that are displeased
with a company do not hesitate to share their bad experience with
others. By communicating clearly with them, you and ensuring your
business always delivers the finest customer service possible, and
that’s another critical component of building customer relationships.
Improves Employee Relationships
No
friendship is ever formed without a good level of communication. The
more a company’s employees communicate with each other, the closer they
will become naturally over time. Bear in mind that much of communication
takes place without the need for words, so it’s important to master
both verbal and non-verbal communication, both in the written form as
well as body language.
Enforcing Rules
Every
business must have a code of policies and procedures that must be
followed in order for everyone to succeed. Maybe there is a specific
process for a task, for example, or maybe there are certain consequences
for underperforming. Either way, you want to make all this very clear
to your employees, or it isn’t possible to do this without strong
communication skills.
This
kind of communication requires more than simply writing out a company
manual and issuing it to each of the new hires on their first day. Any
company knows that rules always need to be altered as things change and
evolve over time, and it’s important to revisit how all of these changes
affect your employees regularly. Even if the general company guidelines
never shift, continually communicating expectations and policies is a
good practice that will never fail. The outline for your business must
be followed at all times, and without communicating about that outline, a
company can’t expect the employees to stay within the lines on their
own.
Enhanced Innovation
No
matter how skilled and talented the people at the top of your company
are, you can never have too many ideas. By encouraging everyone at your
business, whether big or small, to openly share their thoughts without
fear of being shut down, you will quickly notice the employees that have
the most to add. Your best employees have ideas on how you can make
your business run even better, and it’s wise to give them a chance to
speak. A business can become more innovative overnight just by working
together to be good communicators, and that’s bad news for your
competition and good news for your revenue.
Clearly,
the benefits of communication in a business are plentiful, and in fact
it’s hard to imagine any kind of success at all without it. No matter
what kind of business you have, and whether it’s big or small, one of
the single most important determinants of success is communication. If
you feel your business does not have the quality of communication it
should, don’t wait another day to address that issue. There is no need
for your company to suffer from something that can be so easily fixed
with a little effort.
Various Types (Divisions or Classifications) of Communication
Identify the various types (divisions or classifications) of communication
Types of communication
Oral communication
is the process of verbally transmitting information and ideas from one
individual or group to another. Oral communication can be either Formal
or Informal. Examples of informal oral communication include:
  • Face-to-face conversations
  • Telephone conversations
  • Discussions that take place at business meetings
Written communication
involves any type of message that makes use of the written word.
Written communication is the most important and the most effective of
any mode of business communication.
Examples of written communications generally used with clients or other businesses include:
  • Email
  • Internet websites
  • Letters
  • Proposals
  • Telegrams,
  • Faxes
  • Postcards
  • Contracts
  • Advertisements
  • Brochures and
  • News releases.
Visual communication
is the transmission of information and ideas using symbols and imagery.
It is one of three main types of communication, along with verbal
communication (speaking) and non-verbal communication (tone, body
language, etc.). Visual communication is believed to be the type that
people rely on most, and it includes signs, graphic designs, films,
typography, and countless other examples.
Factors that Influence Choice of Communication Media
Point out the factors that influence choice of communication media
FACTORS WHICH SHOULD BE CONSIDERED IN CHOOSING A MEDIUM OF COMMUNICATION.
  1. Quickness/Speed
    There are many types of transactions conducted during the business
    hours. One must speed up the transmission of message on the basis of
    importance and urgency of transaction. If the party is available in the
    transacted place, oral communication is enough. If the party is residing
    in the same city, telephonic message is good: if outside the city,
    message through Subscribers’ Trunk Dialing (STD). If much distance is
    there, then telegram can also be sent. If the matter is not urgent, a
    mere letter will be sufficient.
  2. Accuracy If the
    accuracy of the message is the prime motive, a letter will serve the
    purpose Telephonic conversation might be misheard by the other party.
    Even telegrams, sometimes lead to wrong conclusion. Therefore, success
    can be reaped by a letter, provided the letter is properly written.
    Therefore, the communication medium which is selected should ensure
    accuracy in the transmission of messages.
  3. Safety
    There is always risk when valuables are sent by post. Therefore, for
    safety purposes, important documents may be sent by registered post; for
    further safety by registered and insured post.
  4. Secrecy
    In business field, certain transactions have to be kept confidential.
    When one aims at secrecy, letter will achieve the aim. In other
    communication systems, secrecy may leak out to unwanted persons.
  5. Record
    Record of the message is essential and is possible only if it is in
    writing. For this purpose, duplicate copies of the letters can be
    preserved and they are good proof against disputes, relating to the
    transaction, in future. There is no record for oral communication.
  6. Cost
    The cost of communication is also important. Before adopting any
    system, the expenses in different means may also be considered. The
    material cost (stationery) and labour cost in preparing the letter will
    also be considered.
  7. Distance Distance between
    the persons who are parties to communication is an important factor. If
    distance is too short, face to face communication is suitable. If there
    is distance, message can be transmitted through phone or telegram or
    letter.
Barriers of Communication
  • Lack of skilled personnel in communication
  • Lack of modern communication equipment
  • increased in costs in communication
  • bad weather condition affects communication adversely.
  • remoteness of some areas makes them not easily accessible.

COMMERCE O’LEVEL ALL TOPICS 
FORM ONE TOPICS
FORM TWO TOPIC 1-2.
FORM TWO TOPIC 3-4.
FORM TWO TOPIC 5-6.
FORM THREE TOPIC 1-2.
FORM THREE STUDY NOTES TOPIC 3-5
STUDY NOTES FORM THREE TOPIC 6-8.
FORM FOUR STUDY NOTES, TOPIC 1-2.
FORM FOUR STUDY NOTES, TOPIC 3-4.

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