SIMPLE TOPIC: April 2012

Main Document Used in Transport

MAIN DOCUMENTS USED IN TRANSPORT

Bill of lading

1. The bill of lading is the most important export document whenever goods are sent by ship. It is issued by the shipping company.

2. 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.

(d) The names of the ports of shipment and discharge.

(e) The identification (shipping) marks and numbers.

(d) 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 favor 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.

(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.

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).

(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 its 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.

A delivery note is used whenever a consignor (trader) sends goods by a road haulier company.

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).

(d) A description of the goods in general terms, its weight and the freight charged, its declared value

(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.

An Airway Bill is used whenever goods are sent by aeroplane.

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.

(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.

A Packing List has to be prepared and signed by the shipper or his authorized agent when goods are packed for export.

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.

(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.

A goods received note represents an acknowledgement of the receipt of goods by the consignee.

Reference:

Betsy, L., & Tan, K. S. (1999). Transport., Modern certificate guide: Elements of Commerce
(pp. 154-158). Singapore: Oxford University Press.

Shipping

Main Types of Ships

Passenger liner — this is normally used for carrying passengers, mail and some express cargo. It has a regular time-table and only calls at major ports.

Cargo liner — this is mainly used for carrying a variety of cargo and sometimes a few passengers. It has a regular itinerary. It follows a regular itinerary. It carries a variety of cargo, e.g. machinery, textiles, rubber, wool, and meat in refrigerated chambers and goods in containers. It is highly unlikely that the exporter will have sufficient quantities of one type of non-bulk cargo at any time to fill a whole ship. The freight rates for goods and passengers carried are fixed by their owners with their competitors at the shipping conferences. They are not subject to bargaining with the shipper. However, to encourage shippers to use the services of a particular shipping conference, rebates ‘are given to shippers if they use the services only of members of a particular conference at all times, and not those of a non-conference line. It is not subject to charter (i.e. the hire of the whole ship). However, shipping space can be booked in advance through the various shipping companies or agents who know the itinerary .of the ship. Generally, more control and supervision are exercised over the ship's activities including handling which covers lighterage, movement of cargo from shore to ship and from ship to storage hull.

Shipping conference

A shipping conference is an international organization formed by the owners of cargo liners which ply the same routes in a particular area and charge the same rates of freight for carrying different goods. It is difficult to find a cargo liner which does NOT quote the conference rate. .The same liner company may belong to more than one conference and where routes intersect or overlap, the respective interests of the conferences concerned are secured by mutual agreement. Members of the liner companies forming a shipping conference meet periodically to discuss policy and to fix uniform rates for the different classes of cargo.

Advantages of shipping conference to the ship owners:

(a) The conference prevents competition amongst members.

(b) The conference tries to keep freight rates at a profitable level.

(c) Members' ships are assured of a sufficient minimum of cargo to feed the regular services they undertake to provide. This is achieved by giving shippers who ship their goods entirely in ships belonging to a particular conference deferred rebates on all freight charges paid in a year.

Advantages of shipping conference to shippers:

(a) Shippers are assured of regular sailings.

(b) Shippers are also assured of definite delivery dates for their goods.

Disadvantages of shipping conferences to shippers:

In order to qualify for rebates in freight rates, shippers have to limit themselves to cargo liners belonging to a particular conference.

Transportation via liners — this can be planned ahead as space on ships can be booked ahead. Charges are made according to published tariff rates fixed by the shipping conference.

Tramp — this is essentially a cargo ship which does not belong to any special line of services or sail to any special place. It has no special itinerary, but goes wherever it is commissioned. It usually carries only one type of cargo in bulk, e.g. wheat, timber, rice, maize. It is very likely that an exporter would have enough of one type of bulk cargo to fill a whole ship. Hence, it is more economical to transport bulk cargo in a tramp. The freight rates are determined by bargaining (which depends on supply and demand conditions) at the time when the ship is chartered— usually at the Baltic Exchange, London. Prospective charters normally contact the local shipping agents indicating to them the type of ship required, the date of loading and destination, etc. If necessary, they will contact the shipping brokers at the Baltic Exchange who will then find a suitable tramp for charter. The tramp can be chartered either for a voyage or a period of time. All the terms of the charter are contained in an agreement called a charter party. It is doubtful if a tramp provides such a handling service.

Bulk carrier— This is a ship which is specially built to carry a particular type of cargo, e.g. a bulk carrier is for iron ore.

Tanker — this is a special bulk carrier which carries liquids or gases such as oil or liquefied natural gas.OBO ship — this is an ore-bulk-oil carrier which uses different holds to transport at one time a mixed-bulk cargo. It has holds which can be completely sealed off one from the other.

Roll-on, roll-off or Ro-Ro ship — this is a highly specialized ship that allows loaded vehicles like trucks, trailers, passenger cars, etc. to be driven aboard through ramps at the stern and sides. Using a system of interior ramps, these vehicles are driven to their proper positions, either below decks or topside. At their destinations, they are driven off the ship in reverse to the loading operation.

Container ship — this is built to carry large standardized containers. Containerization involves the stacking of goods in large metal containers. These containers usually conform to international standards of 20 ft x 8 ft x 8 ft or 40 ft x 8 ft x 8 ft. The goods are stacked into the container either at the consignor's premises or at the container terminal and transported as a single unit. These standard sized containers can be transferred between different forms of transport, especially between road, rail and sea, as Lorries, rail wagons and ships have been specially designed to hold them. This integration of different methods of transport ensures that goods are facilitated by using special cranes. There is an increasing tendency for shippers to send general cargo like mail bags, etc. in containers.

Advantages

There is quicker turn-round time for ships because loading and unloading take place simultaneously after the first cell has been emptied, resulting in faster service. This means less unproductive delay and less port dues. There is increased security. Pilferage is quite impossible for the containers are packed and locked by the consignor and opened only by the consignee. Operational and handling charges can be reduced by as much as 50%. This is due to savings on packing, reduced handling and checking of contents and reduced manpower requirements. There is increased protection from damage due to pressure, water or undue weight. It reduces the cost of transporting the goods to the harbor. Packed and sealed containers may be collected from consignors as a single unit and taken to the harbor to be loaded on to the container ships. When the ship reaches its destination, the containers are unloaded onto specially made trucks and delivered to the consignee's premises.

Disadvantages

High capital costs are involved in equipping a container terminal with all the proper facilities. High training costs are incurred in training the labor needed to handle the sophisticated .equipment to load and unload containers. Labor-related problems like uncomfortable working conditions in filling or emptying containers, resistance to change on the part of port workers, etc. may arise. It is not suitable for small loads as there is wastage in space. Not all goods are suitable to be transported via containers, e.g. it is better to ship small consignment bulk machinery or vehicles by cargo liner on account of their dimensions, and oil by oil tankers.

Note: The above classification is only a general way of dividing ships. In practice, various combinations are possible. For example, a tramp could be an oil tanker operating on short routes in the South China Sea. Alternatively, a liner could be a container ship on a regular, route between ports in India across the Indian Ocean and South East Asian ports.

Reference:

Betsy, L., & Tan, K. S. (1999). Transport., Modern certificate guide: Elements of Commerce
(pp. 148-150). Singapore: Oxford University Press.

TRANSPORT

IMPORTANCE OF TRANSPORT

Transport is necessary to provide for the physical movement of people and goods from where they are abundant (such as plantations, mines, farms) to the factory where they are needed as raw materials for the manufacture of finished goods, or where they are processed. It is again necessary to send these processed or finished goods to their markets, and ultimately, to the final consumers, both domestic and foreign. A fast, cheap and efficient transport system has led to the extension of both local and overseas markets. This has enabled producers to specialize and engage in large-scale production with its related cost savings. It has also led to different regions specializing in those goods in which they find comparative advantage in producing on a commercial basis. Trade between different regions within and outside the country expanded. Consumers all over the world can now buy goods produced in far-off countries. Thus, they have greater choice. Standards of living have improved. The main means of transport in home trade are by road, rail, rivers and canals whilst in foreign trade they are by air and sea.

Modes of Transport
Used in Home Trade and Foreign Trade

Road transport

This is the most important means of transport in terms of volume of freight carried.

Advantages

Door-to-door delivery: There is the possibility of arranging delivery from the consignor's straight to the consignee's door. It minimizes risk of loss due to damage or pilferage. It does not require unloading and reloading from one carrier to another as in other modes of transport such as rail or sea. It is suitable for the delivery of fragile goods and items like furniture where even slight damage may be serious.

Flexibility: It is accessible to most regions, however remote. Roads are more widespread and can reach most parts of the country. It is even possible to arrange for special types of truck for specialized items like oil, horses and liquefied natural gas. It is not restricted by the time schedule like that of the rail service. A road transport vehicle will take the shortest route, whereas trains are restricted to where the tracks go. Roads are most suitable for difficult loads especially in terms of height and weight.

Competitive freight charges: Road transport is cheaper and faster for short distances because of lower operating costs and less handling charges. Strong competition between haulers keeps costs down. The proper consolidation of cargo and route planning ensure that a carrier does not return empty. Labor costs are lower compared to those of rail as a carrier needs only a two-man crew.

Disadvantage

Uneconomical (for very heavy loads over 200 miles) : Heavy bulky goods like timber, cement and tin ore are better handled by rail; road transport has a limited load capacity and heavy vehicles are slow on long distances. Trains have powerful engines which can haul many tons. For bulky materials, the cost per ton is less than that by road.

Slower travelling time: A train journey will take less time than a road journey, especially for long distance. Drivers of road carriers have to sleep and rest. Road journeys may be slowed down because of traffic congestion, floods and poor weather conditions.

High social costs : Higher social costs in terms of air pollution, noise and damage to roads and buildings are incurred.

Company vehicles

Many businesses prefer to use their own Lorries instead of hiring them from road haulage companies.

Advantages

It is more economical in the long run if there are regular and sufficient loads to be carried. It provides direct contact to customers and the possibility of responding to customer quickly. Goods are better handled and taken care of. Delivery schedules in terms of time and place can be arranged to suit the customers. As the company logo and particulars like contact numbers usually appear on the vehicles, free advertising is done.

Disadvantages

High capital is involved to purchase the vehicles. High running costs are incurred for fuel, repairs and servicing, road tax and insurance, wages of drivers and managers.

Rail transport

It is the cheapest mode of land transport for long journeys, especially for bulky and heavy items like tin ore, timber and containers. Special containers are available for specialized items like oil, tin ore and livestock.

Advantages

Cheap :It is cheap for carrying goods in bulk over long distances.

Speed : It provides faster services for goods and passengers especially over long distances. It avoids traffic jams in the cities. It is not affected by poor weather conditions.

Special arrangements: Special transporters may be provided for specialized traffic like containers, grain, etc. British Railways allows the producer to use special wagons called company trains to move goods like coal and oil. Container traffic is encouraged to use the rail road by the provision of special liner trains which run regularly between the major cities in UK and the freightliner system where special lorries collect, convey and deliver container loads which are hauled by rail on special wagons.

Environment friendly :Less damage (like air pollution) is done to the environment compared to road transport.

Safety: It is also safer to transport dangerous goods by rail.

Disadvantages

Too much handling : There is the need for unloading and reloading from the carrier to the railway truck and vice-verse when the train reaches its destination. This increases the risk of loss due to damage and pilferage. Containerization and the development of the freight-liner system by the British Railways have reduced this disadvantage.

Inflexible : Trains can only go where there are lines. They only move according to schedule and have fixed destinations. This means that transshipment is necessary at the end of the rail journey.

High costs for short distances and small consignments: Costs tend to be high for short hauls and for small consignments by rail.

High capital costs: Capital costs are heavy. Maintenance of track and railway rolling stock is also expensive.

Inland waterways, rivers and canals

Transport by water is a cheap means of inland transport for heavy and bulky goods like logs, grain and metals. It requires navigable rivers free from rapids and constant silting. Canals may be expensive to build and maintain.

Pipelines

Advantages

Liquid and gaseous goods like liquefied natural gas and petroleum are transported over long distances from the place of production to the refineries, and from there, to the consumers in their homes via pipelines because this is the safest and most economical method to transfer such hazardous (inflammable) material in bulk. Goods in bulk like wheat are also transferred via pipelines from the silos (places of storage) at the ports into special bulk carriers. Maintenance costs are low because very little labor is needed and fuel costs are lower than that required if vehicles were used to transport these goods. There are chances of loss due to pilfering and evaporation is minimized. It is not affected by weather conditions. There is less pollution of the environment compared to vehicles.

Disadvantages

High initial capital cost is involved in installing the whole system, which is normally laid underground. It is rather limited in use. Once built, these pipelines can only be used the particular type of product for which it was originally installed. Long-term use must be guaranteed to make the laying of the pipelines a viable project.

Air Transport

The major part of air transport is concerned with passenger traffic. Sending consignments of goods by air has now become quite popular with traders and manufactures, although air freight charges are very expensive. This is because they have realized that when goods ordered reach their destination quickly, the manufacturer saves by preventing a possible loss due to idle factories or overstocked warehouses. Traders in fashionable goods may also gain as they may be able to sell the goods at the best price whilst the fashion is still very popular due to fast transportation by air. Packing costs and insurance premiums for goods sent by air are less than those for goods sent by sea. Moreover, a journey by air is of a shorter duration and risks of accidents are reduced; so the air transport insurance premium is lower than shipping.

The increase in size of aircraft makes it more economical to run them. Improvements to design, e.g. the fuselage and engine improve fuel efficiency and reduce fuel costs. Larger doors, from the tail and nose reduce loading and unloading time, thus save labor costs. Cargoes of larger size can now be transported by air. With technological improvements, aircraft are now faster and more reliable. More safety features in aircraft, e.g. the 'auto-pilot, improve landing and navigation of the aircraft. With an increase in the number of airports and better handling facilities now available in most airports, less time is wasted. Nowadays, special lightweight containers are available for air cargo.

Characteristics of goods carried by air

Goods must be normally within the prescribed limits set by the airline in terms of weight and volume. They are usually light and fragile items. Heavy and bulky goods are not accepted. Goods can be used to ship live animals, e.g. transporting of rare animals like pandas from China to the zoo in the UK. They can be urgently required goods such as medicinal drugs for a flood affected area where there is an epidemic, spare parts and perishable of great value. They must be sufficiently valuable, e.g. diamonds or light office equipment to be able to bear the relatively high air freight. There is less fear of damage and less packing needed.

Advantages

Speed : Air is the fastest form of transport.

Free from topographical obstacles: Airplanes can take the shortest straight-line routes since they are not obstructed by hills, except when it is necessary to avoid high mountain ranges or areas of uncertain weather conditions.

Lower packing costs: Packing costs are less because the goods do not require special protection like those sent by sea.

Lower insurance costs: Insurance costs are lower than for sea transport because the goods are at risk for a shorter length of time.

Less documentation: Less documentation is required compared to sending goods by sea.

Lower fees for handling and storage: The costs of handling and storage are lower.

Reduction of other costs: The advantage of speed reduces other costs. Goods reach their destinations faster and arc sold off more quickly. Since fresh stock can arrive faster, there is no need to hold large stocks in warehouse. Moreover, the chances of deterioration, damage and pilferage are reduced. So, less working capital is needed.

Disadvantages

Expensive: Air freight charges are expensive because of heavy capital investment and maintenance costs incurred by airway companies.

Limited carrying capacity: As an aircraft has limited cargo capacity, bulky and heavy goods, e.g. cement and coal are seldom sent by air.

Location of airports outside city limits: Airports are normally located on the fringes of large cities. Time is lost in having to transport the goods from the airport to the city. This offsets the advantage of speed of air freight.

Weather conditions: It can be affected by bad weather conditions.

Sea transport

Owing to the high costs of air transport, the bulk of goods exported is sent by sea. Sea transport is still one of the cheapest and most convenient ways of sending heavy, bulky goods such as timber, iron and grains. This is because unlike other modes of transport, seas do not need maintenance and only a small amount of power is needed to steer a ship. With containerization loading and unloading are speedier and pilferage and damage to goods (whilst in transit) are reduced considerably. Specially constructed trucks can now deliver the containers right up to the consignee's door. Moreover, ships have refrigeration facilities for meat and dairy products.

Advantages

Cheap: Sea transport is cheap for carrying bulky and heavy goods as well as goods in bulk over long distances.

Refrigeration facilities: Even perishable goods like fruit and meat can be sent by sea because of refrigeration facilities provided by the ships.

Containerization: Containerization reduces the loss of goods due to pilferage, damage by weather or poor handling. Handling costs at docks are reduced. Special carriers by road or rail are available to deliver containers from the port to the consignee's door-step.

Disadvantages

Slow: It is not suitable for goods urgently needed.

Documentation: Documentation is complex.

Other costs involved: Expenses for insurance premiums, packing costs, and storage and port dues are high.

Delivery to inland destination: Delivery of goods directly to an inland destination cannot be arranged and costly transfers may be needed.

Weather conditions: Bad weather can cause delays and losses at sea.

Water pollution: Oil spills, a result of collision at sea, can cause serious water pollution. Loss of marine life may be quite extensive. It is very difficult and expensive to clean up such oil spills.

FACTORS INFLUENCING THE CHOICE OF TRANSPORT

The choice of transport whether by air, road, rail or by ship (with specification to the particular type of vessel) usually depends on the relative advantages and disadvantages of each mode of transport. The following factors have to be considered first, before one makes a selection.

Distance : Although the cost of haulage increases with distance; the cost of rail and shipping services does not increase in proportion to the distance traveled. Thus, it is more economical to use the rail or shipping services for long distance haulage whilst road transport is faster and cheaper for short distances.

Nature of the goods: Perishable goods need quick delivery and minimum handling. Thus, in home trade, specially constructed trucks are used to transport vegetables, milk and fish. In foreign trade, perishable goods like expensive flowers are normally sent by air. Sometimes, special containers and handling may be needed depending on the nature of the goods. The transportation of oil may require the use of oil tankers in foreign trade and, possibly, pipelines or special oil trucks in home trade. Heavy goods are best sent by sea because it is cheaper.

Quantity/Bulk : Bulky goods are normally transported by railway and canals in home trade, and by sea in foreign trade. The railway is of particular advantage in bulk haulage because the powerful locomotive can haul many wagon-loads of goods such as timber, ores and containers.

Value of the goods: Expensive goods which are small and light are normally transported by air. The risk of loss due to pilferage and damage is less because of the short duration of the journey. If necessary, they may be transported by road since the absence of transshipment, and the constant surveillance of goods would minimize loss due to pilferage. It is not advisable to send valuable goods by train since the rail service is rather impersonal and it is very difficult to keep the goods under constant surveillance. If valuable cargo has to be sent by sea, it is best to send it by ocean liner or passenger liner which calls at fewer ports than does a cargo liner. The goods will then reach their destination faster although the freight charges are higher.

Risk of damage: Fragile goods or goods which are breakable may need careful packing and handling and are normally sent by sea or air. It is not advisable to send such goods by rail. Special precautions like 'Handle with Care — Fragile' are often printed on them.

Urgency/Speed : Goods which are urgently needed are sent by air — the fastest mode of transport.

Convenience: The most convenient mode of transport is the one most available to the consignor with the least formality. Road transport, especially the use of specially constructed trucks to carry standard-sized containers from container ships, is most convenient because of its door-to-door delivery services.

Cost: Cost is of prime consideration for a consignor who would normally choose the most economical mode of transport, unless other factors like urgency and fragility, for example, take priority in a particular situation. Small parcels of food, presents, etc., can be sent fairly cheaply by parcel post to any part of the world.

Reference:
Betsy, L., & Tan, S.K. (1999). Transport., Modern certificate guide: Elements of Commerce (pp. 141-153). Singapore: Oxford University Press.