CHAPTER 12

International LogisticsInternational Logistics

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Learning Objectives

To identify the reasons for governmental intervention in the area of international trade

To distinguish among the unique activities of international trade specialists

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Learning Objectives

To examine issues involved in international air transportation

To relate activities involved in international ocean transportation

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International Logistics

Key Terms

– Customs house brokers

– Export management company

– Export packers

Key Terms

– Export trading company

– Import quotas

– Incoterms 2000

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International Logistics

Key Terms– International Air

Transport Association (IATA)

– International freight forwarders

– Irrevocable letter of credit

– Land bridge

Key Terms– Nontariff barrier– Nonvessel-

operating common carrier (NVOCC)

– Shippers associations

– Shipping conferences

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International Logistics

Changes to political landscape affect logistics– The end of Soviet rule in Eastern Europe– EU economic integration

Nontariff barriers-a rule that has the effect of reducing imports

Restrictions on truck traffic, forcing freight onto rail and water

– NAFTA Multinational firms

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International Marketing

Size or scale of firms may be different Firms selling products under their own brand

are concerned about quality maintenance Consumer preferences differ International credit system is not well

developed– Irrevocable letter of credit

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Figure 12-2: Irrevocable

Letter of Credit

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International Marketing Channels

Domestic (U.S.) channels– Ownership– Negotiations– Financing– Promotions– Logistics

International channel additions– Documentation

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Terms of Sale—Incoterms 2000

EX-Works (EXW) FCA (Free Carrier) FAS (Free Alongside

Ship) FOB (Free on Board) CFR (Cost and Freight) CPT (Carriage Paid To) CIF (Cost, Insurance, and

Freight)

CIP (Carriage and Insurance Paid To)

DES (Delivered Ex Ship) DEQ (Delivered Ex Quay) DAF (Delivered at

Frontier) DDP (Delivered Duty

Paid) DDU (Delivered Duty

Unpaid)

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Government Influences on Foreign Trade

Government controls on the flow of international trade– Customs or duties– Import quotas– Health inspections– Safety standards– Currency outflow– Political or military reasons– Port choice– Non-trade reasons

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Government’s Role in International Transport

International carriage is an export to the nation operating the carrier-affects balance of payments

International fleets and airlines may be subsidized

Large nations must protect their flag carriers’ interests

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International Trade and Supply Chain Specialists

International Freight Forwarders– Advising on acceptance of letters of credit– Booking space on carriers– Preparing an export declaration– Preparing an air waybill or bill of lading– Obtaining consular documents– Arranging for Insurance– Preparing and sending shipping notices and

documents– Serving as general consultant on export matters

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International Trade and Supply Chain Specialists

Nonvessel-operating common carrier (NVOCC)

Customs house brokers Export management company Export trading company Shippers associations

– Shipping conferences Export packers

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Figure 12-4: A Forwarder’s

Export Quotation Sheet Showing

Factors to Include When Determining a Price Quote

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Figure 12-9: A Package Marked for Export

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Logistics Channels in International Distribution

Landward move to the port or airport in exporting country

International air International ocean shipping Landward leg in importing country

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Movement to Port or Airport

To adjacent countries, move is similar to domestic, with more paperwork

To ports– Use containerization

– Land bridge operations

To airports– Chartered aircraft

– Scheduled air carriers

– Integrated air carriers

– International Air Transport Association (IATA)

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Figure 12-12: Large

Containers Used by

International Airlines

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Ocean Shipping

Types of Ocean Cargo– Petroleum– Dry-bulk cargoes-grain, ores, sulfur, sugar,

scrap iron, coal, lumber, logs in vessel loads– Containers

Shipping conferences and alliances pool resources and extend market coverage

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Ocean Shipping

Types of Vessels– Containerships– Lighter aboard ship (LASH) vessels – Roll On-Roll Off (RO-RO) vessels– Tankers– Parcel Tankers– Tramps– Specialized vessels

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Figure 12-17: A RO-RO Vessel in Jacksonville, Florida

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Surface Transport in Importing Countries

Few foreign nations have as wide a range of modes as in the United States

Transportation nationalization is higher in most countries other than the United States

Ship owners are becoming involved in land transport

Short sea shipping along coasts Rail gauges vary around the world

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International Trade Inventories

May vary in small ways from country to country—products may be tailored to fit

Less is needed (than in U.S.) to serve any one country

Return items are impossible to accommodate Import and export quotas affect value of

inventories Currency and language differences