A clothing manufacturer in Hong Kong is going to send a consignment of his products to an overseas buyer, using a container. He has not yet decided whether to use air or sea transport for this consignment.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2011). The mark or mark type is shown in brackets.

1. [4] (a) Any two reasons x 2 marks: containers can be packed at the clothing manufacturer's premises and not unpacked until they reach their final destination; containers can be sent by air or sea transport; containers provide protection against weather/theft/deterioration; containers can be used as storage instead of a warehouse while awaiting shipment; containers can be cleared for customs at the manufacturer's premises so reducing delays; containers can be transhipped between trucks and ships/aircraft so saving time; containers can be easily handled at the docks/airport by special machines. Any other relevant point.
2. [1] (b) Air waybill/waybill/manifest.
3. [1] (c) (i) Bill of lading (accept others if relevant).
4. [2] (ii) Any two purposes x 1 mark each: document of title; receipt for goods received; time of arrival/shipment; gives details of goods carried; terms of the contract of carriage; indication of condition of goods. Any other relevant purpose relating to the document given in (c) (i).
5. [6] (d) Any three factors x 2 marks each: cost of transport – air may be more expensive than sea; availability of transport – may not be a ship ready to sail; value of the goods – security may be needed so air would be more suitable; urgency needed – air is faster and the clothing may go out of fashion quickly; location of the buyer – may be near an airport or in a country that has a coastline; quantity and weight of each consignment – air is recommended for lightweight goods and sea for bulk and heavy goods; timing of the delivery – if speed is needed, air would be more suitable; whether or not repeat consignments will be sent – could make air more cost-effective; protection required – if goods are packed in containers this may not be so crucial. Any other relevant point.
6. [6] (e) Level 2 (4-6 marks) Candidate has given a reasoned opinion looking at both methods of finding buyers and has mentioned any additional information required. (If no additional information is mentioned, award 5 marks max. If a candidate has considered only one method of finding buyers, award 4 marks max.) Finding overseas buyers himself may have always worked but it is time-consuming and his business may be expanding. By using intermediaries he is able to concentrate on other aspects of the business that may have been neglected. By using an export merchant he is passing on to someone else the whole export task, as the export merchant will buy the clothing from the manufacturer and assume ownership of it in order to sell it overseas. Other intermediaries, who should be experts at this work, will introduce the manufacturer to potential buyers. Using intermediaries may have drawbacks, however. They will not be as interested in the success of his business as the manufacturer himself. They will charge commission or pay less for the clothing than if the manufacturer was selling the goods himself. They will need to be supervised. On balance it may be better to use intermediaries who know the market but also to sell directly to the overseas buyers he already has. To make a more informed recommendation, you would need to know what volume of clothing is involved and what the likely charges would be. Level 1 (1-3 marks) Candidate has made some comment on either finding overseas buyers himself and/or using intermediaries with/without an opinion and with/without additional information. It may be a good thing to sell directly to overseas buyers. He will know them personally. Intermediaries may cheat him. They may charge too much commission. His profits may suffer. We do not know enough details of what is to be sold.