Transportation Management

Running Head: TRANSPORTATION MANAGEMENT
Transportation Management
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TRANSPORTATION MANAGEMENT 2
Introduction
This report seeks to analyze the effectiveness of transportation management aspects in
logistics and supply chain management in a real organization. The report focuses on Petronas
Chemicals Company based in Malaysia. The report will analyze the effectiveness of the
transportation capabilities of the Company and make recommendations on the appropriate
Incoterms’ for the Company. Further, the report will analyze relevant information on the
transportation goals and needs for Petronas Company and recommend the appropriate
consideration criteria when choosing its carriers. Finally, the report will evaluate Petrona’s
transportation needs and goals and recommends the appropriate types of relationship with the
carriers and the process of building the relationships.
Petronas Chemicals is a Malaysian owned chemical production company with nearly
three decades of operations in the industry. The company is among the largest integrated
chemical manufacturer in South East Asia with a global presence. Petronas Chemical Group
produces and sells methanol, olefins, polymers, fertilizers among other basics chemicals
products. Petronas Chemicals market its products to more than 30 countries in South East Asia
and the Asia Pacific. The Company sells its product in Malaysia, China, Japan, India, Thailand,
South Korea, New Zealand, Australia, Taiwan, Vietnam, and Singapore among others
(PETRONAS Chemicals Group Berhad, 2017). The brand faces competition from other
chemical products producers such as Saudi Basic Industries Corp, China Petrochem, LG
Chemicals, and Eastman Malaysia. Petronas Chemicals operate with the goal of being the best
and preferred chemical Company with the abilities to provide innovative customers’ solutions in
the industry. The company strategies include achieving the highest plant reliability and excellent
supplier relationship management. Additionally, The Company strategies include achieving
largest market share, attaining best sales margins, excellent customer relationship management
and having innovative solutions for customers as well as having an innovative Company Culture
(PETRONAS Chemicals Group Berhad, 2018). Thus, Petronas Company strategies are anchored
on operational excellence, marketing, and innovation excellence.
Incoterms Selection Consideration
Petronas Chemical group has a functional transport organization and handling subsidiary
that ensures the timely transport logistics planning. The group operates Petronas Chemicals

TRANSPORTATION MANAGEMENT 3
Marketing Labuan limited (PCML) that handles the transport logistics locally and globally
(Petronas Chemicals Group Berhad, 2016). PCML allows the organization to implement smooth
flow of products from the plants to the consumers. Business enterprises that seek to offer
excellent customers’ services must have a transport logistic department that handles the choice of
transport, the safety of products and delivery to customers (Bielecki, 2013). Petronas Chemicals
in recognition of the need to have an operational department dedicated to transportation
management and freight forwarding operates PCML. Enterprises transport logistics department
serves the purpose of planning, executing and monitoring the transportation process (Bektas,
2017). Petronas Chemicals Marketing Labuan Limited is involved in planning and executing the
of Petronas Chemicals transportation services.
Petronas Chemicals transport management subsidiary is involved in the selection of
transport services partners for the delivery of the group’s products. Business enterprises that seek
economic balance must engage the services of external operators to enhance efficiency in the
transportation (Bektas, 2017). Moreover, PCML handles the signing of agreements with
transportation partners. PCML signs memorandum of understanding with logistics management
enterprises for the organizations (Petronas Chemicals Group Berhad, 2016). The involvement of
external operators for Petronas Chemicals Group enhances the efficiency of transportation of
products and timely delivery in the right quantity to the customers’.
Petronas Chemicals transport logistics management subsidiary engages in value-addition
of the group's products during the entire transportation services. Petronas Chemicals Marketing
Labuan Limited engages various partners to create value-addition for the products through timely
delivery (Petronas Chemicals Group Berhad, 2016). Transportation logistics brings together
scattered geographical location while creating product value-addition through the use of time and
place (Yang, Wang & Li, 2016). The delivery of customers’ goods in time and at the exact
location ensures that the products are used where and when needed, thus, adding value to the
Company’s products. Thus, Petronas Chemicals group transportation subsidiary adds value to
the Company’s products by ensuring timely delivery to different geographical locations.
Petronas Chemicals should choose and use Cost and Freight (CFR) and Cost, Insurance
and Freight (CIF) Incoterms in relation to the group’s global business. The Organization will
gain the utmost control of the cost related to delivering the freight to the buyer. Cost and Freight