INSTRUCTION:

Read the article and answer ALL questions.

Malaysian durian exporters booked up with China orders till mid-2020

KUALA LUMPUR Malaysian durian exporters have orders until the middle of next year, after China in May gave the green light to the import of the fruit in frozen form. Five local companies have exported 565 metric tonnes of frozen durian, valued at RM24.3 million (S$8 million), to China in the three months since. Prior to this, Malaysia was only allowed to export durian pulp and frozen paste to China, which previously got whole durians from Thailand.

Top Fruits Sdn Bhd managing director Dr Tan Sue Sian told The Malaysian Insight this has posed a challenge, as the company will have to find a way to meet demand during the fruits off season. Top Fruits is one of the five firms approved by the Agriculture and Agro-Based Industry Ministry to export the King of Fruits to China. Dr Tan said Chinese demand will spike by as much as 50% during the durian season.

We would receive orders of up to 60 containers. It will be quite challenging for us to meet demand because the fruit is seasonal, he said, adding that the company is looking at ways to tackle the problem. The current price for a durian weighing 1.5kg to 2kg in China is between 199 yuan and 399 yuan (S$38.65 and S$77.49). The Musang King is the most sought-after variety, with its price going from RM60 per kg up to RM100 per kg.

He said the whole fruits sent to China are frozen, and good for 18 months. For frozen durian paste, most is sold to importers in Beijing, Shanghai, Guangzhou, Shenzhen, Nanning, Xiamen, Qingdao, Zhejiang Suzhou, and Chinas second and third-tier cities. Dr Tan said the huge export demand will not leave the local market starved of supply. While the better-quality fruits are exported, there are still lots more quality fruits for local durian lovers.

Deputy Agriculture and Agro-based Industry Minister Sim Tze Tzin has warned exporters that they risk losing their licence if they do not meet the set quality standards. Only A-grade durians

those that weigh at least 1.4kg each are allowed to be exported. Sim said local companies should emulate Chinas method of promoting durians online, as they are no longer confined to booths at trade fairs in this day and age. We hope private organisations will help us promote frozen durians, besides coming up with their own brands with the help of the ministry. He told The Malaysian Insight that the durian harvest in Malaysia is good this season, and there is ample supply to meet demand in both the foreign and domestic markets.

People in China, too, have started to grow durian trees, following the fruits skyrocketing popularity. China has areas with an environment, soil and climate similar to durian-growing countries in Southeast Asia. It normally takes between eight and 10 years for durian trees to mature, but there is technology available to speed up the process.

QUESTIONS

1. Interpret the following terminologies in context of the situation mentioned in the article above: (8 Marks)
   1. Logistics management
   2. Reintermediation
   3. Bullwhip effect
   4. Vertical Competition

2. Discuss economic and technology environment factors that will influence the decision of

Top Fruit Sdn Bhd durian logistics management to China. (10 Marks)

3. Risk will create stockout.

1. Describe the TWO (2) possible risks related to logistics management to Top Fruits in distributing its frozen durian abroad. (5 Marks)

2. Explain TWO (2) expected cost incurred from stockout situation of fresh durians supplied by the durian growers. (5 Marks)

4. Sales depot at Top Fruits Sdn Bhd will be responsible to process the orders received from fresh durian suppliers. Describe the order processing activities that the depot has to carry out efficiently. (12 Marks)

5. Explain FIVE (5) facilitating services required by Top Fruits Sdn Bhd in their logistics activities of sending the durian to China. (10 Marks)

6. Propose a suitable intermodal transportation service to move the frozen durian from the packaging house in Batu Pahat, Johor to Guilin, one of the major cities of China which is about 2614.63 km away. Justify your proposal. (10 Marks)