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International logistics

Introduction

Course objectives

Analyze the basic operation of each of the components of


a logistics system
Compare and contrast the systems nature of the logistics
process
To prioritize opportunities for comprehensive analysis and
discussion of key contemporary problems in transportation

Contents
1. Meaning, cope and importance of logistics in international business
2. Different types of cargo: Packaging requirement and types of vessels for import
3. Types of Shipping Services: Liner and Tramp Services
4. Containerization: Types of Container Sizes, FCL,LCL, Containers
5. Inland Container Depot: Concept of Dry Ports, ICDs, Import Export Warehouses,
Container Freight Station (CFS) and Container yards (CY)
6. Storage and Warehousing in International Logistics Chain
7. International Physical distribution of manufacturing locations and target markets
surveyed as apart of the supply chain and as an essential component of global
strategy

Contents

8. Differences between domestic and international physical


transportation, infrastructure and th availability of modes ( MultiModal)
9. Global Supply chain- Brief Introduction and related concepts
10. International logistics cost
11. Documentation for Shipping
12. International Air- Freighting
13. Role of CHA Freight Forwarder

Introduction to
International Logistics

International Trade

Bretton-Woods Conference (1944) leading to


- International Monetary fund (1945)
- General Agreement of Tariffs and Trade (GATT)
World Trade Organization (1995)
European Union (1993) , Euro (2002)

Historical development of International Logistics

Aftermath World War II evolution of trade among nations


Small level traders moving across nations with risks
including international travel.
Origins from the Greek word Logistike
Modern interpretation is from the Military with activities
related to procurement of ammunitions and essential
supplies to troops located at front.

What is Logistics?

Process of planning, implementing and controlling the


efficient, cost effective flow and storage of raw
materials , in-process inventory, finished goods and
related information from point of origin to point of
consumption for the purpose of conforming to customer
requirements.

Logistics?

Business logistics: moving cargo


General logistics: moving cargo and moving people

What is the Goal of Logistics?

Logistics Activities
Network design
Information
Transportation
Inventory
Warehousing, material handling and packaging

Major Components

Materials management:
What a company does with inputs the way a company acquires
materials such as raw materials or parts, how a company
handle them once they arrive at the company, and how they are
shipped out.
Physical distribution:
The way a company delivers its product to the market, which
could be the customers or retailers

Activities involved in Logistics

Scheduling the arrival of materials and


other inputs
Warehousing and inventory control
Strategic choice of international
warehousing facilities
Scheduling production
Packaging, transportation and final
delivery
Analysis of transportation costs

A typical Logistics System

International Logistics

International logistics is the process of planning,


implementing and controlling the flow and
storage of goods, services and related
information from a point of origin to point of
consumption located in a different country.

Evolution of a Logistics System

Demand forecasting
Purchasing
Requirement planning
Production planning
Manufacturing inventory
Warehousing
Material handling
Industrial packaging
Finished goods inventory
Distribution planning
Order processing
Transportation
Customer service
Strategic planning
Information technology
Marketing
Sales

Materials
management

Logistics
management
Supply
chain
mgmt
Physical
distribution

Major concepts in International Logistics

1. The systems Approach


2. The total cost concept
3. The trade-off concept

The Systems Approach

Thinking of the logistical system that flows from raw


material to the end user
Whether inside or outside the organization
That system has a common goal(s): quality, speed,
timing, etc.
More relevant due to technical advances in transport
and corporate information systems
The results of those goals can be a valuable
competitive advantage

The total cost concept

Better coordinating or streamlining the logistical steps can


significantly reduce costs.
Reduction in every logical step of the logistic process from
arrival, inventory, warehousing, transportation, delivery
etc.

Trade-off Concept

Making changes in one part of the system to gain benefits


typically involves trade-offs. Speed-Cost, timing-cost,
quality-speed.
But there can be win-wins: cutting out middle-men: lower
cost and greater speed.

Examples of Trade- offs

Faster (premium) transportation versus reductions in pipeline


(transit) inventories
Make vs. buy decisions re: finished products and/or component
parts
Centralized vs. decentralized warehousing
Adding or reducing private fleet equipment vs. outside
transportation services
Whether to increase frequency of shipments vs. carrying larger
inventories
Switching to alternative modes
Public vs. private warehousing

Differences -Domestic VS International Logistics

i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
xi.

Transport Mode
Inventories
Agents
Financial risk
Cargo risk
Government agencies
Administration
Communication
Insurance
Packaging
Payment

Why firms Enter International markets?

Market Potential
Geographic Diversification
Excess Production Capacity and Low Cost Position
Near end of Life-Cycle in Domestic Market
Source of New Products and Ideas

Role of Logistics in International Trade

Conscious decisions- where to produce their goods- where to sell themhow to move them from one to the other.
It is of no use having very low production costs in a particular place if
the finished product cannot be moved easily, cheaply, and reliably to
the customer.
There are two principal aspects to good logistics.
- Cost: lower costs are self-evidently attractive to firms.
- Quality: logistic reliability is paramount for many companies.

Features of International Logistics

Multiple Operating Environments (Diverse Pattern Of:)


Consumer Preferences
Distribution Channels
Legal Frameworks
Financial Infrastructures
Political Demands & Risks
Mesh Corporate Strategy With other Countries
Industrial Development Policies Potential For Conflict

Features of International Logistics

Global Competition
Multiple Market Access & Global Scale Economies
Allows New Strategic & Competitive Options
Currency Fluctuation: Forex Risk
Economic Performance, measured In multiple
currencies Accounting & Economic Exposure
Organizational Complexity & Diversity
Need to Manage Complex and Diverse Demands
across Distance, Time, Language & Cultural Barriers

Features of International Logistics

Cross-border Requirements for Packaging,


Recycling, Infrastructure, etc.
Many developing countries have good international
seaports (to get primary goods out) or airports (for
national pride), but have poor internal systems (to get
products to consumers)
Some variations are on purpose: keep out foreign
goods or invaders
Lower Costs + Increased Reliability and Integration
Outsourcing Need for Different Intermediaries

Features of International Logistics

Complex Distances & Transportation Modes


Ocean & Air Transport more common than for domestic flows
Governments often regulate which carriers can be used,
especially for sales to the government
Must factor in total carrying costs including delays, port
storage time, warehouse inventory and exchange rate
changes
Global Operations and Product Customization (at order
/shipping point or in local environment) Complicated
Logistical Systems

Shipping

Liners: Regularly scheduled on established routes


Bulk/tramp/charter contractual services for individual
voyages on possibly irregular routes
Conventional ship good for bulk or irregularly sized cargo.
Time consuming to load and unload
Container ship: The most common of major routes. Facilitates
easy loading/unloading and intermodal transport. Cannot go to
every port
Roll-On-Roll-Off (RORO) Ocean-going ferries. Typical for
short routes to under-developed ports

Thank you