2. Comparison of Domestic and International LogisticsCost
Transport mode
Inventories
Agents
Financial risk
Cargo risk
Government agencies
Administration
Communication
Cultural differencesAbout 10% of U.S. GDP today
Mainly truck and rail
Lower levels, reflecting short-order, lead-time requirements and improved transport capabilities
Modest usage, mostly in rail
Low
Low
Primarily for hazardous materials, weight, safety laws, and some tariff requirements
Minimal documentation involved (e.g., purchase order, bill of lading, invoice)
Voice, paper-based systems adequate, with growing usage of electronic data interchange and Internet
Relative homogeneity requires little product modificationEstimated at 16% of world GDP today
Mainly ocean and air, with significant intermodal activity
Higher levels, reflecting longer lead times and greater demand and transit uncertainty
Heavy reliance on forwarders, consolidators, and customs brokers
High, owing to differences in currencies, inflation, levels and little recourse for default
High, owing to longer and more difficult transit, frequent cargo handling, and varying levels of infrastructure development
Many agencies involved (e.g., customs, commerce, agriculture, transportation
Significant paperwork; the U.S. Department of Commerce estimates that paperwork cost for an average shipment is $250
Voice and paper costly and often ineffective; movement toward electronic interchange but variations in standards hinder widespread usage
Cultural differences require significant market and product adaptationDomesticInternational
3. International Market Entry StrategiesExporting
Licensing
Joint venturesOwnership
Importing
Countertrade
4. Major Participants in an International Logistics TransactionDomestic
sellerExport
facilitatorsInland
transportation
carrierDomestic
port or terminal
of exitForeign port
or terminal
of entryInternational
carrier
(air, water)Foreign inland
transportation
carrierForeign
buyerDomestic
bankDomestic
government
agenciesForeign
government
agenciesForeign
bankInformation flowProduct movement
5. How Duty Drawbacks Work1) U.S. car manufacturer issues purchase order to German parts manufacturer.2) German manufacturer receives purchase order; manufactures parts.3) German parts shipped via ocean enter U.S. port; importer pays duty at port of entry to U.S. Customs.4) U.S. manufacturer produces cars using U.S.-made and German parts.5) U.S. manufacturer ships cars to port of export; files documentary proof of original import and subsequent manufacture to collect refund.6) Export cars containing U.S.-made and German parts to Australia; provide proof of export to U.S. Customs.Source: Adapted from Lisa H. Harrington, “How to Take Advantage of Duty Drawback,” Traffic Management 28, no. 6 (June 1989), p. 121A.
6. The Global Logistics EnvironmentLogisticsexecutiveCustomerserviceOtheractivitiesWarehousingand storageTransportationPackagingInventoryPolitical and legalTechnologyEconomicGeographySocial and culturalCompetitionControllable ElementsUncontrollable Elements
7. Responding to Competition with LogisticsIncreasing the number of cross-national partnerships, alliances, mergers, and/or acquisitions.
Expansion of many previously domestic-based organizations into international markets.
Development of global communications networks operating 24 hours a day.
Establishment of country and regional warehouses in major world markets.
Identifying and developing relationships with logistics service providers that offer transportation, storage, materials handling, and other services on a global basis.
8. Exporting CompaniesExport distributor
Customshouse broker
International freight forwarder
Trading company
Non-vessel-operating common carrier (NVOCC)
9. How NVOCCs WorkaLCL shipperLCL shipperLCL shipperLCL shipperLCL shipperNVOCCBill of ladingLess than container load (LCL) shipmentsFull container
10. How NVOCCs Work (cont.)NVOCCConsigneeConsigneeConsigneeConsigneeConsigneeLess than container load (LCL) shipmentsFull containerBill of lading13-9 b