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Shipping to South Africa

 

Shipping to South Africa

Student’s Name

Institutional Affiliation

 

 

 

 

 

 

 

 

 

 

 

 

Shipping to South Africa

Supply Chain Development Team

City Location to Serve as Base of Operations

After careful and critical consideration, the preferred location to establish the base of operation is the City of Cape Town and specifically in Epping Industria. Epping is an industrial area in Cape Town, South Africa, whose industrial development dates back to the 1940s. The primary factors influencing the establishment of the base in Cape Town are its strategic location and connectivity to the rest of the world and, in particular, to the western hemisphere. Notably, Epping is situated in the middle of the Cape Town region, and such strategic position makes it the business center to serve the entire region.

(Horrell, 2014)

Epping is bordered to the north by Bontenheuwel and Langa, Pinelands borders it to the east, with Thornton, Viking Park, Ruytewacht, and WP Park bordering it to the south. Furthermore, its strategic location provides an easy access to the Northern Suburbs, Southern Suburbs, Atlantic Seaboard, or even Somerset. What is more, the area has access to the basic transport routs in the Cape Peninsula. Namely, Epping is connected to the M7 (Jakes Gerwel Drive), the N2, and N1. Additionally, the M16 (Viking Way) which lies in proximity to Epping, easily links to Pinelands and the M17 (Jan Smuts Drive) in addition to other major routes. The roads are also wide enough to accommodate all forms of large trucks. Epping was specifically planned to be used as an industrial hub. The roadways were, therefore, designed to serve heavy commercial trucks, and with the proliferation of larger automobiles over the recent past, the wide roads are quite essential. Furthermore, the wide roads allow for “stacking” of trucks, which is common in congested delivery points.

(Horrell, 2014)

Thirdly, the strategic location of Epping provides significant logistical costs. Since Epping’s location is central to the greater Cape Town region, businesses operating in the area incur lower and logistics expenses. Most importantly, the cost savings are not restricted to the short distances covered when using road transport, but also the duration of travel is less since the roads covering the region are free of traffic congestion.. What is more, Cape Town International Airport is situated close to Epping. Thus, the distance from Epping to the Airport is only a 10 KM drive. Additionally, the roadways to and from the airport are normally free of traffic congestion making it easy to transport goods and people along the route. Furthermore, the airport’s runaway is currently being realigned with its completion resulting in a 50% increase in capacity, which will translate to a positive knock-on effect on all the surrounding business locations including Epping. Epping is also close to the port of Cape Town with a radius of 10 KMs. Although road travel is a bit longer, the area is a strategic business location owing to its proximity to both the airport and the port.

Epping also enjoys enhanced security in comparison to other areas since there is constant security camera surveillance throughout the industrial complex. The Epping CID security agency operates round the clock and patrols the area using vehicles and quad bikes in addition to sophisticated closed-circuit television (CCTV) cameras that are strategically located in the area. The security agents monitor the cameras in real time making it easy to identify a suspected criminal activity. Epping also enjoys the adequate supply of energy since it accesses power from the nearby Athlone Power Station. Culture is a major factor to consider for multinational firms since it has a direct impact on their operations (Waters, 2015). The history of Cape Town dates as far back as 1482 and is characterized by a vibrant population, whose culture is influenced by Zulu, British, Dutch, German, Indonesian, and French settlers. Furthermore, Cape Town is a major tourist destination and, therefore, continues to enjoy a mixture of multitude global cultures. Although Cape Town’s culture does not mirror that of the United States, it is characterized by the most diverse and globally connected population.

The most appropriate Incoterm that makes the firm’s plastic resin pellets commercially attractive to the importer in South Africa but also protects firm is CIF – Cost, Insurance & Freight. CIF is most appropriate since the allocation of costs is balanced between the buyer and the seller. The figure below illustrates the allocation of costs between the two parties according to Incoterms 2010.

Under CIF, the firm will be responsible for paying for the cost of shipping the goods up to the Port of Cape Town in addition to meeting the relevant insurance costs. However, the buyer assumes responsibility for the goods once they are loaded onto the ship. Additionally, government regulations, policies, and tariffs are more relaxed towards a local firm in comparison to a foreign one. Therefore, CIF will favor the entire transaction since the local importer will also be responsible for obtaining clearance for the goods by paying for a customer in addition to paying the import duties and taxes (Waters, 2015).

 

 

 

 

 

References

Horrell, R. (2014). Growth model Epping: A method of measurement and analysis of industrial growth. Cape Town, South Africa: University of Cape Town.

Plunkett, J. W. (2014). Plunkett’s transportation, supply chain & logistics industry almanac 2014: The only comprehensive guide to the business of transportation, supply chain and logistics management. Houston, Texas: Plunkett Research, Ltd.

Waters, C. D. J. (2015). Global logistics: New directions in supply chain management. Boston, Massachusetts: Credo Reference.

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