O-LevelCommerceTransport7100/22 · Oct/Nov 2017 · Q620 Marks

T Transport (TT) is an international freight forwarding business that moves goods around the world.

(a)(i)A freight forwarder is an intermediary in foreign trade. Give one other example of an intermediary.[1]
(a)(ii)Apart from transport, state three services offered by a freight forwarder.[3]
(b)(i)Explain two reasons why communication is important to a freight forwarder operating in the global economy.[4]
(b)(ii)Do you think TT should use the internet as its main means of communication? Give reasons for your answer.[4]
(c)TT operates in a freeport. Explain what is meant by a freeport.[2]
(d)A customer of TT wishes to send regular shipments of high quality sports equipment to another country 3000km away. Discuss whether or not the equipment should be sent by sea or by air. Give reasons for your choice.[6]

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2017). The mark or mark type is shown in brackets.

[1] Wholesaler
[1] Broker
[1] Factor
[1] Merchant
[1] Agent.
[1] Provide storage/warehousing
[1] Pack goods
[1] Arrange insurance
[1] Arrange customs clearance
[1] Prepare documentation.
[1] Many freight forwarders have operations in many different countries
[1] and communication is vital between their various offices
[1] The freight forwarder will have to liaise with the importers in other countries
[1] in order to arrange to deliver the goods
[1] to make agreements
[1] They will also use communication to advise of any delays/problems
[1] they may track the delivery of goods
[1] Yes. The internet provides a fast/cheap form of communication
[1] whether by email/website
[1] but there is an initial cost of computer equipment / software
[1] It is easy to update information on the internet
[1] so TT can inform contacts of all the latest developments
[1] Useful for tele/video-conferencing
[1] saving time/money of employees having to travel for face-to-face meetings
[1] No. Security is always a problem on the internet
[1] TT must invest in the latest security software
[1] ensure that its staff is trained to follow correct procedures
[1] The connection to the internet must be reliable
[1] this may be a problem for some of TT's international contacts
[1] Despite the security and reliability problems, the ease of use of the internet will probably mean that the internet will become TT's main form of communication
[1] A freeport is a geographical area / port area within a country
[1] where production of goods can be carried out
[1] where there is no customs duty / tariffs on any goods whether entering/leaving or on re-exported goods or on goods stored.
[1] Sea transport will be cheaper than air transport
[1] Air transport would reach its destination much quicker
[1] Sea transport can be affected by weather conditions, such as rough seas and salty air
[1] Air transport does not operate in very bad weather, but it may delay the flight by an hour or two
[1] The documentation for air freight is usually simpler
[1] The security for air freight is usually tighter, but transit time is shorter so there is less opportunity for damage and theft
[1] High quality sports equipment is valuable, so the extra cost of air freight will not be a significant factor in deciding the final price of the equipment
[1] Air freight is therefore the recommended transport method.
[1] However, if competition means that price becomes more important, then savings can be made by transporting the equipment by sea.