CHAPTER 13

Global Logistics
 Comparison of Domestic and 13-2

International Logistics
Domestic International
About 10% of U.S. GDP today Estimated at 16% of world GDP today
Cost
Mainly ocean and air, with significant intermodal
Transport mode Mainly truck and rail activity
Inventories Lower levels, reflecting short-order, lead- Higher levels, reflecting longer lead times and
time requirements and improved transport greater demand and transit uncertainty
capabilities
Agents Heavy reliance on forwarders, consolidators, and
Modest usage, mostly in rail customs brokers
Financial risk Low High, owing to differences in currencies, inflation,
levels and little recourse for default
Cargo risk Low High, owing to longer and more difficult transit,
frequent cargo handling, and varying levels of
infrastructure development
Government Primarily for hazardous materials, weight, Many agencies involved (e.g., customs,
agencies safety laws, and some tariff requirements commerce, agriculture, transportation
Administration Minimal documentation involved (e.g., Significant paperwork; the U.S. Department of
purchase order, bill of lading, invoice) Commerce estimates that paperwork cost for an
average shipment is $250
Communication Voice, paper-based systems adequate, with Voice and paper costly and often ineffective;
growing usage of electronic data movement toward electronic interchange but
interchange and Internet variations in standards hinder widespread usage
Cultural Relative homogeneity requires little product Cultural differences require significant market and
differences modification product adaptation
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 13-3
International Market Entry Strategies

• Exporting • Ownership
• Licensing • Importing
• Joint ventures • Countertrade

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 Major Participants in an International 13-4
Logistics Transaction
Domestic Domestic
bank seller

Domestic Export
government facilitators
agencies
Inland
transportation
carrier
Domestic
port or terminal
of exit
International
carrier
(air, water)
Foreign port
Product or terminal
movement of entry
Foreign Foreign inland
government transportation
Information agencies carrier
flow
Foreign Foreign
bank buyer
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 How Duty Drawbacks Work 13-5

1) U.S. car 3) German

manufacturer parts shipped via
issues purchase ocean enter U.S.
order to German port; importer pays 2) German
parts duty at port of entry to manufacturer
manufacturer. U.S. Customs. receives
purchase order;
manufactures
parts.
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 6) Export
proof of original import cars containing
and subsequent U.S.-made and
manufacture German parts to
to collect refund. Australia;
provide proof of
export to U.S.
Customs.

Source: Adapted from Lisa H. Harrington, “How to Take Advantage of Duty

McGraw-Hill/Irwin Copyright
Drawback,” © 2001
Traffic by The McGraw-Hill
Management Companies,
28, no. 6 (June Inc. All rights reserved.
1989), p. 121A.
 13-6
The Global Logistics Environment

eg al Ec
dl on
an om
al ic
litic
Po
Customer
service
Social and cultural

Other
Inventory

Competition
activities
Logistics
executive
Warehousing Packaging
and storage

Transportation
Ge
og logy
ra no
ph ch
y Te

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 13-7
Responding to
Competition with Logistics
• Increasing 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.

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 13-8
Exporting Companies

• Export distributor
• Customshouse broker
• International freight forwarder
• Trading company
• Non-vessel-operating common
carrier (NVOCC)

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 13-9 a
How NVOCCs Work

LCL shipper LCL shipper LCL shipper LCL shipper LCL shipper

NVOCC

Less than container load

(LCL) shipments Full container Bill of lading

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 13-10
13-9 b
How NVOCCs Work (cont.)

NVOCC

Consignee Consignee Consignee Consignee Consignee

Less than container load Full container Bill of lading

(LCL) shipments
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