MES Logistics, a division of MES Group (https://mesgroup.com.sg/), provides efficient, integrated and customised door-to-door solutions for commercial transport and warehousing. In Singapore, the trucking fleet of MES Logistics comprises more than 70 modern and well-maintained cargo trucks and equipment.

(a) analyse two (2) main reasons why you think companies that need to transport goods and services should outsource their logistics activities to Third Party Logistics (3PL) providers such as MES Logistics and two (2) main reasons why they should not outsource.

How has the COVID-19 pandemic affected outsourcing to 3PLs providers? Give

reasons to support your answer.

(15 marks)

(b) The transport manager observed from historical data that the average demand was 3,000 kg per month when the transport rate was $6.80/kg. When the company charged a new transport price of $8.50/kg, the average demand decreased to 2,700 kg per month. Assume other than the transport prices that all external and internal conditions are the same. Comment on the price elasticity of demand for this situation.