Assignment #3: Marine Insurance / Customs Brokers

Fat-E is under constant pressure to improve their products. In particular, reducing weight allows for better performance. Fat-Es design team has found a potential new supplier of the gear mechanism that can significantly reduce the overall weight of the bicycle. The new gear mechanism is available from a German supplier however they will only work under EXW terms. This will require Fat-E to take on new responsibilities that the previous supplier from France had performed. You have been asked to consider this potential change from a logistical perspective and report back to the senior management team.

Specifically, you have been asked to:

1. Provide a description of the potential insurance clauses that could be purchased and a recommendation on the coverage that Fat-E should purchase for the new German gears. 2. Provide a description of the role and function of a Customs Broker and a recommendation on using one for the new German gears.

Format for Assignment 3

In this final assignment, you will need to create a full report that includes a cover page, table of contents, executive summary, report body, references and appendices. You have one extra week to complete this assignment. The length guideline for this assignment is approximately 2,000 words in total (inclusive of your executive summary, brief introduction, and report body), and a Word template has been provided to help you with the set-up.

You have been hired as the Director of Transportation for Fat-E. Fat-E is three-year-old firm, founded by three university friends based out of Ottawa, Ontario. The company makes electrically powered bicycles made for off-road trail riding. The Fat- E is unique in that it is based on the "fat tire" bike already on the market. Fat-E's model includes an electric motor and with a heavy-duty transmission that automatically changes gears while moving. There are other bikes in this market, but the Fat-E is unique in that the transmission is electronically controlled, saving precious battery life power when in use. The firm has begun to build a relatively loyal customer base, and markets itself to offroad cycling enthusiasts, and off-road cycling clubs. Fat-E started originally by manufacturing their first models on their university campus in space provided by their entrepreneurial centre. The owners quickly outgrew this space and moved into a small industrial unit just outside Ottawa (Kanata). Since then, the company has grown to expand into the two adjacent units in the industrial complex. From this location they managed the entire business including 24 permanent full-time staff (mixed between administration, production, and warehousing). Business is strong and Fat-E has now outgrown the space they currently occupy and unfortunately there are no more adjacent units in the industrial complex for them to consider expanding into. The Bike: The bicycle is comprised of a heavy duty steel frame, weighing 48 pounds, two oversized rims with oversized "fat" tires, a battery that is integrated into the frame, and the patented transmission that has been integrated into the frame at the rear wheel. When fully assembled, the finished bike weighs 84lbs. It is packaged and shipped with front wheel off and occupies a corrugated box: dimensions: 48 inches long 12 inches wide 30 inches high. The Fat- E is not palletized, and ships individually via courier. The bike contains a lithium-ion battery and due to dangerous goods regulations cannot be shipped by air. There are four primary components to the bicycle - the frame, battery, gears and wiring, and the wheels. Each is sourced from an individual supplier outside of Canada: The steel frame is manufactured in China and shipped via LCL. The battery is manufactured in Tennessee (USA) using LTL service paid for by the battery supplier. The gears and wiring are purchased in from a supplier in France using LCL service that is arranged by the seller. The final component, the wheels, are sourced from a supplier in Mexico City (Mexico). If Fat-E orders six or more pallets of wheels the supplier includes the cost of freight in the price of the wheels. If Fat-E orders less than six pallets the supplier arranges for LTL service but adds this expense on to the invoice to Fat-E