The pie chart in Fig. 1.1 shows the costs of global logistics by activity. The stacked bar chart in Fig. 1.1 shows the costs of global logistics by methods of transport. [Figure 1.1] Use Fig. 1.1 to help you answer the following questions.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2023). The mark or mark type is shown in brackets.

1. [1] • Warehousing
2. [1] Inventory is the raw materials used to produce goods / goods that are available for sale / stock of goods/materials
3. [2] Correct answer $4429bn (2) Method: $297bn + $4132bn (1)
4. [4] Any 2 advantages and explanation of each to a maximum of 4 marks • Quick (1) over long distances (1) compared to air / sea (1) • Cheaper (1) compared to road or other mode of transport (1) Suitable for heavy / bulky / large goods (1) e.g. copper (1) due to large capacity (1) • Safer (1) to carry dangerous goods / e.g. nuclear waste (1) • Eco-friendly (1) less pollution / less carbon emissions / electric trains (1) • Less affected by bad weather (1) leading to fewer delays (1) • Fewer delays (1) caused by traffic congestion (1) • Direct network / access (1) some lines can go straight to factory / warehouse (1) • Having many railway wagons to one train means more goods can be carried in one journey (1) whereas it would take many road journeys to carry the same capacity (1)
5. [2] 1 mark for each correct circled answer Global logistics is the process of moving goods internationally. Robots are used in warehouses to pick out goods to complete orders.
6. [6] Up to 2 marks for describing overseas agents / exporting. Up to a further 2 marks for analysing the importance of overseas agents when exporting goods. Up to a final 2 marks for evaluating whether overseas agents are important when exporting goods. An overseas agent is a representative that a business hires to find customers, and in some cases, negotiate and conclude the final sales contract. Some agents are brokers and some are factors. Reasons for using overseas agents: • A broker will bring buyers and sellers together saving an exporter time • A factor will sell goods on behalf of the exporter putting less pressure on the exporter to deal with contracts • A business is able to concentrate on other aspects of the business that may otherwise be neglected. • Overseas agents should be experts at this work and will introduce the business to potential buyers leading to increased sales. • Overseas agents will have the necessary expertise in what they are selling and what the local consumers are likely to demand as they will have a network of contacts so reducing the risk of failure. • Overseas agents, such as freight forwarders, assume responsibility for transporting / warehousing / customs clearance which saves a business time gaining that knowledge and expertise. • It cuts down the need to travel to overseas markets, and the time saved can be used for other purposes. • Solves the problem of not being sure whether they will receive payment for goods / some intermediaries such as del credere agents, guarantee payment – so avoid bad debts. Reasons against using overseas agents: • Agents may not be as interested in the success of his business compared to the export owners • Agents will charge commission or pay less for the products than if the business was selling directly • They may not be exclusive, as they may have more favoured clients that they promote • Agents will need to be supervised – as they may carry out unethical practices Evaluation: Overseas agents are very important to sellers as they have great knowledge of the market that they want to sell to. They will have formed relationships with a range of potential buyers that will be interested in buying your products. It would be impossible for many businesses to have the time and money to find new markets or prospective buyers in another country.