Logistics Management

A. Definition
B. Logistics Definitions
C. Additional Definitions
D. Institute

A. Definition

Logistics is a term associated with the movements and storages of produced or procured goods (equipment and bulk materials) and cargoes, for the construction or other using as well as the project people' transportation and lodging arrangement.

Logistics Management is a part of the work process of the procurement management and supply chain management that includes the logistics planning, implementation, and control of the produced or procured items effectively and efficiently. The Logistic Management consists of the transportation for movement, warehouse management for storage, and information management such as related information from the point of origin to point of end user; inbound and outbound movement; internal and external interfaces for the customs clearances to achieve the timely in its delivery with cost effective way and meeting the project or contract requirements.

Logistics Model can be defined: 1PL (First Party Logistics): A Company sends goods or products directly; 2PL (Second Party Logistics): A Company utilises the vehicles or planes to transport goods or products; 3PL (Third Party Logistics): A Company maintains management oversight through a 3rd party outsourcing transportation and logistics company; 4PL (Fourth Party Logistics): A Company outsources management of logistics activities as well as the execution across the supply chain; 5PL (Fifth Party Logistics): A 5PL Provider supplies innovative logistics solutions and develops an optimum supply chain network. (Refer to the Fourth Party Logistic Model (4PL))

Logistics Facility is a facility dedicated to logistical operations for the storage and distribution including warehouse, loading and unloading facilities.

Material Management is the process of planning, organising, and controlling the flow of bulk materials that is a systematic measuring and trending of bulk material quantities of the cost associated with the purchase, supply, and installation. The Material Management is one of the critical activities for the project success that involves all aspects of the supply chain, including sourcing and procurement, inventory management, transportation, and storage. (e.g., quantity forecasting and supplying of bulk materials from BM take-off, and material handling to construction installation) The Material Management within the procurement organisation is an integrated effort between estimating, project controls, engineering disciplines, and construction field material controls.

Procurement Management is a work process of managing and controlling the procurement activities (e.g., bidder evaluation; bidding; contracting; expediting and inspection; transportation; payment; close-out etc.) to supply required equipment and materials or services to the project team on time, within budget and respected quality and quantity. The procurement work process is developed based on a fair and open competition. The procurement team evaluates and records a performance of suppliers (vendors) with the project team and related organisations to update company’s bidder list (supplier’s list) for the future business. Responsibility of the procurement team can be extended to a whole bulk material handling work process: the Material Management (from the bulk material take off (MTO) to field material control).

Procurement Work Process (Cycle) is the series of work steps to procure goods (equipment or materials) or services. The Procurement Work Process consists of identify to be procured items (grouping, to be handled together) is the first step, and create the final bidder list with pre-qualification, generate a request for quotation (RFQ, Inquiry and Requisition), release the RFQ to approved bidders, evaluate bidders' commercial and technical proposals, select a successful bidder (vendor, supplier or sub-contractor) through clarifications and negotiations, award and make contract (release a Purchase Order (PO)), expedite and inspect supplier's work progress and performance, held an acceptance test, hand-over material or service from supplier and make a final payment, and perform an appraisal for record and close-out. 

Supply Chain Management (SCM) is the managing and controlling the supply chains (e.g., a source of raw material, fabrication or manufacture, logistics, expediting and inspection, end-user, and so on) effectively and efficiently to support the project and future business requirement.

Warehouse Management is the managing and controlling of the movement and storage of materials within a warehouse efficiently and effectively.

B. Logistics Definitions

Customs Clearance

Customs Clearance is a gateway pass certificate of the imported or exported goods, materials or cargoes that the national customs authority grants to enter or leave the country. The Customs Clearance is typically given to a shipping agent or freight forwarder to prove that all applicable customs duties have been paid and the shipment has been approved.

Clean on Board is a document of the aboard vessel with no exceptions as to cargo condition or quantity that is the goods have been received in a good order and condition.

Delivery Condition is an agreement guaranteeing that contractual conditions including the transporter, routing, freight charges, place of delivery, and time of delivery.

Bill of Lading (B/L or BOL) is a shipping document issued by a carrier or his agent that is a carrier acknowledges receipt of freight, describing the freight and setting forth a contract for carriage including who pays the freight charges. The Bill of Lading document is a legal document that consists of an evidence of contract (consignor's and consignee's name) of carriage, name of the vessel and ports, receipt of goods or cargo, and document of title to the goods or cargo, etc.

Packing List (Shipping List or Packing Slip) is a shipping document of a particular package or shipment that includes the type of good, size, quantity for a delivery package, and the itemised details of the package contents, and cost per shipping unit (does not need to include customer pricing), etc., for the customs clearance and invoicing. The Packing List is to inform all parties, including transport agencies, government authorities, and customers, about the contents of the package, usually inside an attached shipping package.

Packing is 1) the act of putting things into boxes or carriers to protect goods for the transportation; 2) the sealing material inserted into a valve stem box to create a tight seal.

Shipping Document is any document that is required for an item to clear customs including the bill of lading, commercial invoice, certificate of origin, insurance certificate, packing list, etc.

Customs Duty is a tariff or tax imposed on imports or exports of goods and services when they transported across international borders. The purpose of Customs Duty is to protect each country's economy, social, and environmental sustainability by controlling the flow of goods and services.

Import Duty is a tariff or tax imposed on the import goods and services including other import charges that is payable when the goods enter the economic territory, or the services are provided. (Refer to the Customs Duty; Export Duty)

Export Duty is a tariff or tax imposed on exports of goods and services including other export charges that is payable when the goods leave the economic territory, or the services are delivered. (Refer to the Customs Duty; Import Duty; Export Tax)

Good Code is the Harmonized Commodity Description and Coding System (HS code) of the tariff.

Harmonised System (HS) is the Harmonised Commodity Description and Coding System that is a multipurpose international product nomenclature developed in 1988 and has since been developed and maintained by the World Customs Organization (WCO) (formerly the Customs Co-operation Council). A HS is the commodity structure of external trade flows of goods that is an internationally standardised system of names and numbers to classify traded products. (Refer to the HS Code (Harmonised Commodity Description and Coding System); Tariff Code)

Harmonised System or Harmonised Commodity Description and Coding System (HS Code) is an international standardised system of names and numbers for the classification of commodities of the tariff nomenclature in which articles are grouped largely according to the nature of the materials. A HS Code is used as a basis for the customs tariffs and for the collection of international trade statistics based on a 6-digit nomenclature and individual countries have extended this to 10 digits for import and 8 for export. It came into effect in 1988 and has since been developed and maintained by the World Customs Organization (WCO) with over 200 member countries. (Refer to the Tariff Code)

Tariff Code refers to the HS Code (Harmonised System or Harmonised Commodity Description and Coding System)

Incoterms are the international commercial terms made by the International Chamber of Commerce (ICC) that is used in international commercial trading or procurement processes. The last revision (1999) is named INCOTERMS 2000, and a new revision of Incoterms, to be called Incoterms 2020. (e.g., Ex-Work; FOB (Free on Board); FAS (Free Alongside Ship); C&F (Cost & Freight); CIF (Cost, Insurance & Freight); DAP (Delivered At Place (named place of destination)), etc.)

Cost and Freight (C&F) is one of the Incoterms for an international trading, the price of purchase includes a price of a good and freight costs. Seller (Supplier) is responsible for the transportation of a good to the designated position, and buyer is responsible for them from that point.

Cost, Insurance, and Freight (CIF) is one of the Incoterms for an international trading, the price of purchase includes a price of good, insurance and freight costs. Seller (Supplier) is responsible for transportation of goods to the designated position, and buyer is responsible for them from that point.

Ex Ship is one of the Incoterms for international trading that is an alternative name to Delivered Ex Ship (DES), used in LNG shipping.

Ex-Work is one of the Incoterms for international trading, the purchasing price includes a price of good at the supplier's manufacturing shop. A buyer is responsible for all expenses from that point.

Free on Board (FOB) is one of the Incoterms for international trading which the price of purchase includes a price of good and all expenses up to on board of transporter. Seller (Supplier) is responsible for transportation of good to the designated position (board), and buyer is responsible for them from that point.

Cash on Delivery (COD) is a payment method by which the recipient pays for a good at the time of delivery rather than in advance or using credit. (Alos, called as a collect on delivery or cash on demand)

Door To Door (D/D) means that goods and cargo are shipped and delivered from the original point of manufacture to the final destination.

Material Handling Cost (or Material Related Cost, MRC) consists of the goods (equipment and material) freight, insurance, custom clearance costs, etc.

Shipping Insurance is an insurance that applies for goods or materials which is transported by mail or courier services instead of the Marine and Cargo Insurance.

Marine Cargo Insurance is the insurance of properties as they move from a point of origin to final destination. The Marine Cargo Insurance covers the loss of or damage to goods or cargoes while in sea or air as well as subsequent land transportations both domestic and international. (Refer to the Shipping Insurance)

Tariff is a term and condition of taxes or charges for the import or export goods or services that is a schedule of rates or charges offered by a common carrier or utility: fares, freight charges, prices, rates, etc.

Transportation

Freight Forwarder is a company or an organisation who is specialised in arranging storage and shipping of goods or cargo on behalf of its shippers. The Freight Forwarder usually provides a full range of services including: tracking inland transportation; preparation of shipping and export documents; warehousing, booking cargo space; negotiating freight charges; freight consolidations; cargo insurance, and filing of insurance claims, etc. The Freight Forwarder usually transports under his own bill of loading or airwaybill with his agents or associates at the destination, and provides document delivery, deconsolidation, and freight collection services, etc.

Shipment is a large amount of goods moving under a single bill of lading or waybill.

Shipment Capacity Measurement is the ship's size and capacity that can be described in two ways: linear dimensions expressed in feet and inches (length, width, and depth), or tonnages (ton, barrel). Example Terms are: LOA (overall length of the ship); Beam (maximum breadth of the ship); Complement (number of people required to operate a ship); Bale Capacity (cubic feet to the inside of the cargo in bales, on pallets); Grain Capacity (inside of the shell plating of the ship), etc.

Transportation (or Transport) is 1) the movement of people or goods, or cargoes from one place to another; 2) a ​system of ​vehicles; 3) a process of moving goods or cargo.

Transportation Supply Chain is an act of the required finished goods from the start location to destination that includes the raw material supplier, manufacturing and distribution process, and the transportation network in between.

Transporter is a long vehicle used for moving several large or heavy loads from one place to another.

Barge is a ​long ​boat with a ​flat ​bottom, used for ​carrying ​oversize or heavy ​materials on ​rivers or ​canals with own power or towed by another. (Refer to a Lighter Aboard Ship (LASH) System)

Common Carrier is the transport of the people or property and available to charge a fee for the transportation of the people or goods operated by a person or company, who has the responsibility of any possible loss of the goods during transportation. The Common Carrier services to the general public under a license or authority provided by a regulatory body, and can not refuse to carry a particular people or goods without justification. In the gas business, the Common Carriage is a term often used interchangeably with open access and third party access.

Liner is a large ship designed to carry passengers or transport goods from one seaport to another along regular long-distance maritime routes according to a schedule.

Lighter Aboard Ship (LASH) is a type of vessel that carries standardised pushed barge. A LASH is a typically towed or pushed around harbours, canals or rivers and cannot be relocated under their own power. For moving cargo from ship to shore and the other way around, a barge or other shallow water craft is carried on-board a ship. It is a single-decked vessel with large hatches, wing tank arrangements, and a clear access to the stern.

Self-Propelled Modular Transporter (SPMT) is a platform vehicle with modules of four, five or six axle lines. The modules can be connected to multi-wheel transporters to transport a load that is too big or too heavy for a truck or low-loader. A SPMT can rotate around its centre to make a 360° turn (carrousel) and can move sideways. Each SPMT axle can carry up to 40 metric tonnes, including its own weight. The modules fit on a normal truck. A separate power pack drives the (connected) module(s) and supplies hydraulic pressure for the steering, driving and height adjustment of the modules.

Oversize means a bigger than usual or too ​big. An Air Cargo limitation is a dimension of a 463L pallet loaded to the design height of 96 inches, but equal to or less than 1,000 inches in length, 117 inches in width, and 105 inches in height.

Airfreight is the transporting goods carried by airplane, or the system of carrying goods by airplane. (Refer to the Air Waybill (AWB))

Bulk Cargo is any unpacked dry cargo shipped in bulk such as grain, coal and construction bulk materials (e.g., soil, sand, pipes, cables, etc.).

Bulk Carrier is a ship designed with a single deck and holds for the bulk carriage of loose dry cargo of a homogenous nature.

Bulk Container is designed for the carriage of dry bulk cargo. Usually overseas transportation.

Cargo is goods or materials carried by a truck, ship or aircraft.

Cargo Ship is a merchant ship designed for the carriage of goods and/or public transport of passengers.

FILO (Free In / Liner Out) is a freight shipping rate of the loading goods into the ship in the logistics terms that includes the freight rate of cargo and the cost of offloading as per the customs of a port, but the loading of the cargo on the shipboard is not included in the freight rate. (Opposite of the LIFO (Liner In / Free Out))

Last in first out (LIFO) is an inventory valuation method that the first good withdrawn from inventory of produced goods, raw materials, parts, components, or feed stocks is the last one which entered.

LIFO (Liner In / Free Out) is a freight shipping rate of the loading goods into the ship in the logistics terms that includes in the freight rate, whereas unloading is not. (Opposite of the FILO (Free In / Liner Out))

LILO (Liner In / Liner Out) is a freight shipping rate of the loading goods into the ship in the logistics terms that includes the costs both loading and unloading of the cargo in and from the ship.

Lift On/ Lift Off (LO/LO) is a lifting of cargo on or off a vessel or ship by crane.

Roll-on/Roll-off (RO/RO) is a vessel designed to carry an extra heavy or oversize cargo which will be driven on and off the vessel by other facility, such as SPMT (Self-Propelled Modular Transporter) (Refer to the LO/LO (Lift On/ Lift Off))

Material Handling

Barcode is a machine-readable code in the form of numbers and a pattern of parallel lines of varying widths that is an optical, representation of data, printed on a commodity and used especially for stock control. (Refer to the QR Code (Quick Response Code))

QR Code (Quick Response Code) is a type of two-dimensional bar code that consists of square black modules on a white background. A QR Code is made of small black squares and rectangles that are arranged in a square pattern on a white background that codes for text, URL or other information. QR code formats are now standardised under ANSI as well as AIMI in 1997 and to ISO/IEC standards in 2000. (Refer to the Barcode)

Storage is an action or method of putting and keeping of things in a special place.

Bonded Area is authorised by customs authorities for the temporary storage of imported or to be exported goods or cargoes without the customs clearance is proceed (before payment of duties). The Bonded Area is a designated area including warehouse or other secured area used in export and import of international trades. 

Laydown Area is a space of ground or pavement located near or at the construction site that is for the receipt, storage and partial assembly of the project equipment and materials to be installed or constructed.

Marshalling Yard is a place where material and equipment are stored for consolidation.

Inventory Accounting System is the whole process and system of accounting changes in inventoried goods with the valuations that a business has not yet sold, and keeping a track of for any changes in the inventories. The Inventory Goods are categorised into three stages: raw goods, in-progress goods, and finished goods that are ready for sale. There are two systems to account for inventory: A Perpetual System - the inventory account is updated after every inventory purchase or sale, and the periodic system, and A Periodic System - the evaluation of inventory occurs only at the end of each accounting period.

Overage, Shortage and Damage (OS&D) is an inspection report for the purchased materials that is prepared by a buyer at the time of goods or cargoes (equipment and materials) are delivered at the receiving area (mainly, construction site of warehouse), or handed over them from a supplier based on the purchasing terms and conditions. The OS&D Report provides information on the cargo quantity and condition in which it was received that may be filed depending on where and how the incident occurred and who is responsible or liable for them.

Warehouse Management System (WMS) is a computer software application that supports the daily operations in a warehouse. A WMS allows the centralised management of warehousing tasks for the inventory control, tracking including the location of stock items.

C. Additional Definitions

Affreightment is a legal term used in the logistics that is the chartering or hiring of a ship in whole or part.

Air Waybill (AWB) is a document issued by an airline transportation company that is to acknowledge possession of a shipment. An AWB is a receipt or an evidence of the contract of goods and indicate conditions of carriage.

Average Particular (or Particular Average) is a legal principle of maritime law that is loss or damage to maritime property (a ship or its cargo), caused by the perils of the sea, or borne by the owner of the lost or damaged property. In contrast with the General Average, the Average Particular does not involve a common interest. (Refer to the General Average)

Bale Capacity (or Bale Cube) is a shipment capacity measurement that is a cubic capacity of the vessels hold to carry packaged dry cargo such as bales or pallets. (Refer to the Shipment Capacity Measurement)

Chargeable Weight is the measurement used by freight carriers to determine the price when calculating the cost of moving the shipment by converting the volume into a weight equivalent (or volumetric weight). Normally, the greatest weight (volume or actual) is charged.

Cold Chain is a logistics management process for products transportation that requires the refrigerated temperatures to meet the customer's demand. A Successful Cold Chain is an uninterrupted series of refrigerated production, storage, and distribution activities, along with associated equipment and logistics, which maintain quality via a desired low-temperature range. Delivering vaccines to all corners of the world is a complex undertaking that takes a chain of precisely coordinated events in temperature-controlled environments to store, manage and transport these life-saving products.

Congestion is obstacles of the processing of incoming and outgoing in the path that creates delays or turbulence.

Dead Freight

D. Institute

International Code of the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk (IGC Code) applies to ships regardless of their size, including those of less than 500 gross tonnage, engaged in carriage of liquefied gases having a vapour pressure exceeding 2.8 bar absolute at a temperature of 37.8°C, and certain other substances listed in chapter 19 of the Code. The aim of the Code is to provide an international standard for the safe carriage by sea in bulk of liquefied gases and the substances listed in chapter 19, by prescribing the design and construction standards of ships involved in such carriage and the equipment they should carry so as to minimize the risk to the ship, to its crew and to the environment, having regard to the nature of the products involved. (Source: http://www.imo.org/)

International Maritime Organization (IMO) is the United Nations specialized agency with responsibility for the safety and security of shipping and the prevention of marine pollution by ships. A​​s a specialized agency of the United Nations, IMO is the global standard-setting authority for the safety, security and environmental performance of international shipping. Its main role is to create a regulatory framework for the shipping industry that is fair and effective, universally adopted and universally implemented. (Source: www.imo.org/)

More Definitions - visit to the Shop!