Cambridge IGCSE Commerce: Logistics in Commerce — Revision Notes

Logistics in commerce is about moving goods to the right place, at the right time and in the right quantity, and storing them until they are needed. Cambridge IGCSE Commerce (0715, first examined 2028) splits Topic 4 into 4.1 Transport and 4.2 Warehousing. Expect to compare transport methods, choose the best one for a given situation, and explain why warehouses - and warehouse automation - matter in the supply chain.

For full explanations see the logistics study guide, then test yourself with the logistics practice questions.

Syllabus coverage (0715, 2028)

Section	What the syllabus lists
4.1 Transport	Three functions (time, place, quantity); road, rail, air, sea and pipeline methods; advantages and disadvantages; choosing a method; containerisation and transshipment
4.2 Warehousing	Functions; bonded, cold storage, cash and carry and RDC warehouses; automation (robotics, automated sorting, voice picking) and its benefits

What are the three functions of transport?

Function	Meaning
Time	Goods arrive when customers need them
Place	Goods are moved from where they are made to where they are bought
Quantity	The right amount arrives, avoiding shortages or excess stock

Which transport method should a business use?

Method	Examples	Advantages	Disadvantages
Road	Delivery vans, trucks, couriers	Door-to-door; flexible routes and times; good for short distances	Congestion; limited load; pollution; accidents
Rail	Freight trains	Bulky goods over long distances; fewer emissions per tonne	Fixed routes and times; goods need transferring to road at each end
Air	Freight planes	Fastest over long distances; secure; good for valuable, perishable or urgent goods	Most expensive; limited capacity; airports needed
Sea	Ferry, tanker, container ship, cargo liner	Cheapest for heavy, bulky goods internationally; huge capacity	Slow; port delays; weather; risk of piracy or damage
Pipeline	Oil, gas, water	Continuous flow; low running cost; little labour	Very high build cost; only liquids and gases; leaks hard to detect

Factors affecting the choice (learn all six):

1. Nature of goods - perishable, fragile, bulky, liquid or valuable.
2. Urgency - how fast the goods are needed.
3. Cost - compared with the value of the goods.
4. Security - risk of theft or damage.
5. Distance - local, national or international.
6. Reliability of transporter - record of delivering on time.

Worked example. A florist in Nairobi exports fresh roses to Amsterdam for Valentine’s Day.

• Nature: perishable. Urgency: high. Distance: long and international.
• Best choice: air freight, refrigerated. The high cost is justified by the high value of fresh flowers and the short shelf life. Sea would be cheaper but far too slow.

What is containerisation?

• Goods are packed in standard-sized metal containers that move between ship, train and truck without being unpacked.
• Transshipment: containers are transferred from one ship or vehicle to another at a hub port on the way to their destination.

Advantages	Disadvantages
Faster loading with cranes	High cost of containers, cranes and special ports
Less theft and damage - containers are sealed	Smaller ports cannot handle large container ships
Lower insurance and labour costs	Empty containers must be returned
Easy transfer between transport methods	Not suitable for all goods, e.g. some bulk liquids

What does a warehouse do in the supply chain?

Function	How it helps
Links with seasonal production	Stores crops harvested once a year for sale all year
Links with demand	Builds up stock before seasonal peaks (e.g. festivals)
Protecting supply	Keeps buffer stock if deliveries are delayed
Price stability	Releasing stored goods steadily avoids sharp price rises and falls
Logistics postponement	Final assembly, labelling or packing happens near the customer once orders are known

Which types of warehouse are there?

Type	Key feature	Typical user
Bonded	Imported goods stored before customs duty is paid	Importers of spirits or tobacco
Cold storage	Refrigerated or frozen	Food, medicines
Cash and carry	Wholesale warehouse where retailers pay and collect	Small shopkeepers
Regional distribution centre (RDC)	Large hub serving a chain’s shops in a region	Supermarket chains

Worked example. A supermarket chain imports frozen fish and runs 40 stores in one region.

• Frozen fish must stay frozen from port to shelf, so it needs cold storage.
• Supplying 40 stores from one large hub, rather than separate deliveries from each supplier, points to an RDC with a cold-storage section. The chain receives full loads in bulk, then sends mixed loads to each store, which cuts the number of journeys and keeps stock levels matched to each store’s demand.

How does automation change warehousing?

• Uses: robotics (moving and picking), automated sorting (conveyors and scanners), voice picking (workers follow spoken instructions through a headset).
• Benefits: lower labour costs; less human error; improved picking accuracy; improved inventory control; improved customer service through faster, correct orders.

Common mistakes and exam traps

• Saying air is “best” without linking it to the nature of goods or urgency.
• Forgetting the extra handling cost of rail, which usually needs road at each end.
• Confusing a bonded warehouse with a cash and carry.
• Describing containerisation without mentioning standard sizes or transfer between modes.
• Listing automation tools without a benefit.

Frequently asked questions

What are the three functions of transport in 0715? Time, place and quantity. Transport delivers the right quantity of goods to the right place at the right time.

Why do importers use bonded warehouses? Customs duty is paid only when goods leave the warehouse, so the importer can delay payment, or avoid it if the goods are re-exported.

Is transshipment the same as containerisation? No. Containerisation is the use of standard-sized containers. Transshipment is the transfer of those containers from one ship or vehicle to another at a hub on the way. Containers make transshipment quick, because the goods inside are never unpacked.

What is logistics postponement? Delaying final steps such as labelling or packing until orders are known, often at a warehouse near the customer, so stock matches demand.

Official syllabus

Cambridge IGCSE Commerce (0715) syllabus for 2028 - official syllabus PDF, Topic 4.