Transportation and Distribution Management

This report discusses transportation and distribution management, specifically incoterm selection, carrier selection criteria, and carrier relationship management. It provides recommendations for DHL, a German logistics company, on how to improve their transportation capabilities. The report also includes information on DHL's goals and strategies, competitors, and products and services.

Running head: Transportation and Distribution Management
Transportation and Distribution
Management

Transportation and Distribution Management 1

Transportation and Distribution Management 2
Contents
Introduction................................................................................................................................................3
Incoterm Selection Consideration...........................................................................................................4
Recommendations for appropriate Incoterm to be used for the company........................................5
Carrier Selection Criteria.........................................................................................................................5
Recommendation of the Carrier Selection Criteria for DHL................................................................6
Carrier Relationship Management..........................................................................................................7
Recommendations on type and process of carrier relationship are built by the company.........................8
Conclusion.................................................................................................................................................9
References.................................................................................................................................................10

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Introduction
Transportation and distribution can be referred to as moving of products from
manufacturing plants to warehousing and in between facilities to distributors. They
represent more than half of the total logistics costs. A transportation management
system (TMS) is a subpart of supply chain management which concerns about
transportation operations. It can be a part of the enterprise resource planning system.
Distribution Management refers to supervising the movement of goods from
suppliers or manufacturers to the point of sale ( Vieira, Fransoo & Carvalho, 2015).
This report introduces to the effectiveness of the three aspects of transportation
management viz. incoterms selection consideration, carrier relationship management
and carrier selection criteria. As a transportation manager of DHL, I would analyze the
effectiveness of these three aspects of transportation management.
DHL Express is the division of Deutsche Post DHL, a German logistics company.
It provides the services related to the international courier, express mail and parcel
services. It is the largest logistics company operating around the world. It also operates
through sea and air mail.
The company was found in the US in the year 1969. In the year 2016, the
revenue of the division accelerated by 2.7% to €14 billion. The Earnings before Interest
and Taxes (EBIT) of the company were enhanced by 11.3% to €1.5 billion in the year
2015(DHL International GmbHb, 2018).
It is serving over 220 countries around the globe. It has a workforce of around
350,000 employees serving to the business units DHL express, DHL e-commerce, DHL
Global Forwarding, DHL Supply Chain and DHL Freight.
Its products and services include forwarding the freight with the planes, ships,
trucks and trains all over the world. Its warehousing facilities go beyond storage and
range from packaging to repairs, customized and specialized shipping and international
deliveries of mail.

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The goals and strategies of DHL Express are to be the logistics company for the
whole world. Its mission pertains to delivering of excellence. Its strategy for the year
2020 comprises three pillars of Focus, Grow and Connect. Its vision, mission and goals
are described in its “Strategy 2020”(DHL International GmbHc, 2018).
Its major competitors are UPS, USPS, FedEx and SAP Logistics Execution and
Shipping easy. Its market share is 29.4% and is ranked second out of nine logistics
technologies (Datanyze, 2018).
Incoterm Selection Consideration
DHL has adopted a set of Incoterms for competing in the market and serving to
its consumers. Incoterms are a framework of rules which are used for the interpretation
of the commonly used terms of trade.
The application of incoterms to sale and procurement of contracts make the
international trade easier and develop a better understanding amongst the partners
operating in different countries. They also help in reducing the risk of the parties.
The rules for any mode of transport pertain to Ex Works or EXW. It implies when
the seller delivers the goods at the disposal of the buyer at its own premises or at any
other factory or warehouse. It is not necessary for the seller to load the goods on any
vehicle or clear the goods for exporting them (Garcia, Marchetta, Camargo, Morel &
Forradellas, 2012).
FCA or Free Carrier is also followed by DHL. It means that the company delivers
the goods to the carrier or any other person nominated by the buyer at the premises of
the seller or any other factory or warehouse.
DAT or Delivered At Terminal implies that the goods are delivered by the seller at
the terminal or place of destination as named by the buyer. CPT or Carriage paid to
implies that the goods are delivered by the seller to the carrier or another person who is
nominated by him at a place which is agreed between the two (DHL International
GmbHa, 2018).

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The effectiveness of the transportation capability of DHL is that DHL Express
offers the delivery services for a day for pieces up to 70 kgs and shipments up to 1000
kgs with regards to export services. With regards to its import services, the company
imports the shipments from over 200 countries all over the world ( DHL,2018).
Recommendations for appropriate Incoterm to be used for the company
An appropriate incoterm can be recommended for DHL in this regard to make its
services better and efficient. The concept of FAS or Free alongside Ship can be
implemented in this regard. It means that goods are delivered by the seller when the
products are placed outside the vessel. The vessel is nominated by the buyer and the
risk of damage to the goods is passed on to him when they are placed on the ship.
(Maloni, Gligor & Lagoudis, 2016).
Carrier Selection Criteria
The transportation goals and needs of DHL are that it wants to be the logistics
company for the world. It aspires to expand its business beyond its current operations in
220 countries. Its target is to expand its capabilities for providing a wide range of
activities.
It wants to offer a variety of logistics solutions varying from critical express
deliveries to the economical transportation of freight. It targets to deals with the
complexity of the global supply chain. Its Strategy 2020 says that it is built on the three
pillars of Connect, Focus and Grow (Schroeder, Zilske, Liedtke & Nagel,2012).
It has laid down clear plans and procedures for accomplishing its goals. It has
also reassured that its strategy is to be a provider, employer and investment of choice
along with contributing to a benefit of the world which is also known to be its ‘’Living
Accountability”.
Its human resources possess a great amount of expertise, talent and know how.
DHL is working for tapping the talent of its employees for expansion of its business all

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over the world. It has introduced its worldwide certified program which is a special
training program for the workforce.
It has also aimed to grow itself in new markets and segments, emerging markets
and e-commerce markets in particular. Its strategy is to tap and gain market share along
with broadening its logistic services so that it can achieve the goals of its Strategy 2020.
Recommendation of the Carrier Selection Criteria for DHL
Following are certain recommendations for selection for carriers for DHL:
1. Firstly, it is recommended that the carrier should be an active
member and have a good reputation amongst local, national, regional,
international trade and industry groups.
2. The carrier should have a specific point of contact for DHL. The
contact should be through an official with an authority to take decisions on behalf
of the carrier. He should be able to respond to the queries of DHL along with
having a right to handle all the issues related to the matter.
3. The carrier should be able to provide with a list of its current
customers so that the company can enquire about the performance of the carrier
(Isaksson & Huge-Brodin, 2013).
4. The carrier should provide data related to its balance sheet and
income statements to the company. The financial department of DHL can utilize
the data i.e. short term ratios and long-term ratios for assessing the ability of the
carrier. It will assist DHL in making a financial overview to make significant
capital improvements (Golicic, Fugate & Davis, 2012).
5. It should be assessed if the pricing structure of the carrier aligned
with similar transportation providers in the industry. The recent history of the
carrier in terms of pricing and rating should also be evaluated by DHL. Besides
this, the carrier should also have flexibility in rating based on volume and tenure
of contract.

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6. The financing and costing system of the carrier should be easy and
flexible to understand and explain. The mechanism should be aligned with the
services which are been provided by the carrier.
7. The billing cycle should be harmonious with the accounts payable
process of DHL. It should also provide a discount of payments done before the
payment date as well as some option of delayed payments (Chu & Wang, 2012).
8. The carrier should be innovative and participate in quality initiatives
like quality circles and current ISO9000/1/2 certifications. The ocean carrier
should comply with the IMO International Safety Management Code ( ISM).
It should also comply with Document of Compliance (DOC) regarding the
shore side operations and Safety Management Certificate (SMC) for all its
containers of 500 GRT and above.
9. The carrier should have a long-term workforce contract. It should
have an acceptable history which is devoid of long-term work stoppages,
disputes and strikes. The turnover rate of employees should be at or below the
average rate of industry (Lai & Cheng,2016).
Carrier Relationship Management
The transportation goals and needs of DHL are the development of cost-efficient
transportation rates along with reducing overheads, total inventory and cost per order
processing. The warehouse operations, procedures, layouts and flow should be also be
improved (Evangelista, 2017).
The company intends to establish a two-way relationship with the transportation
carrier. For improving the logistic efficiencies, the vendor platform should perform the
value-added services like quality inspections, marking and packaging (Meixell & Norbis,
2012).
It helps in improving the possibilities of errors and speed product flow of source
based services through the warehouse. It also aims to assimilate the transportation
processes into the warehousing operations and layouts.

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It aims to consider outbound and inbound conveyances and queue up the
shipment carriers in order to increase the consumer services. In the present era, DHL is
the largest logistics company in the world. So, on the basis of its core, it aims to benefit
from its financial stability, vast resources and massive buying power (Yang, 2012).
It has invested in supply chain technology and has a global reach. So, in the area
of transportation management, it aims to provide globally standardized, cost-effective
and high quality and innovative solutions.
Besides this, growing consumerism, growing markets, increased need for lean
and risk-controlled approaches and blurring sector boundaries have led the company to
focus on the market challenges. So, it needs to develop strategies for meeting its
present and future needs of supply chain management (DHL International GmbHd,
2018).
Recommendations on type and process of carrier relationship are built
by the company
The company shall build a strong relationship with its carriers. When shippers
and carriers work together as a team, they must respect the resources and business
objectives of their business partners. They should create a win-win partnership which
leads to continuous improvements in the efficiency and consumers services.
They must treat the carriers with respect and work with a sense of urgency. DHL
must show empathy and treat the carriers professionally and be ready to assist them
while they are carrying the load to the destination ( Fransoo & Lee, 2013).
DHL must not cancel the shipments at the last minute may lead to a loss in the
business, rather the company should conduct effective discovery and set clarity in its
expectations regarding the load and lane levels. The carrier must also avoid potential
issues over the road.
DHL must offer secured business and growth opportunities. It shall assist in
offering desirable and consistent business movements so that the trucks can keep

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moving around the clock. It must also offer freights which match with the specified
needs and growth opportunities from the new and existing business (Govindan,
Palaniappan, Zhu & Kannan, 2012).
The process of building a relationship with the carrier can be explained as under.
Firstly, the company shall take the time to gather data from the carrier. It can be related
to the preferences relate to modes of transportation by the carrier etc.
Secondly, maintenance of trust and keeping of relationships is important in
carrier relationship management. Thirdly, it is crucial for the company to share the
growth with the carriers. Fourthly, the company should adopt the Transportation
Management System (TMS) to help the business grow and remain updated with the
needs of the ever-changing industry ( Aguezzoul, 2014).
Conclusion
Hence to conclude, it can be said that DHL is amongst the largest logistic
company in the world. It has a global reach and expertizes to benefit its clients as per
their requirement. The clients are benefitted from the strategic advantage and
capabilities of the company.

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References
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Datanyze(2018). About DHL . Retrieved 16th November, 2018 from
https://www.datanyze.com/market-share/logistics/dhl-market-share
DHL International GmbH (2018a). INCOTERMS® 2010.Retrieved 16th November, 2018
from https://www.logistics.dhl/sg-en/home/our-divisions/global-forwarding/
customer-service/incoterms-2010.html
DHL International GmbH (2018b). A Dynamic Global Supply Chain Starts At Your
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