International logistics Known as planning, organization, and management of the movement of goods, information, and resources across international borders. It involves various activities such as transport, warehousing, inventory management, customs compliance, and documentation. Here are some examples of international logistics:
1. Import & Export: When goods are transported from one country to another, international logistics plays a crucial role. For example, a company in the United States importing electronics from China needs to coordinate transportation, arrange for customs clearance, and manage inventory to ensure the timely arrival of goods.
2. Third-Party Logistics (3PL): Many companies outsource their logistics functions to specialized 3PL providers. These providers offer expertise in international logistics and handle activities such as freight forwarding, customs brokerage, and distribution. For instance, a clothing retailer may partner with a 3PL to manage the transportation of garments from manufacturers in various countries to retail stores worldwide.
3. Multi-modal Transportation: International logistics often involves the use of multiple modes of transportation, including air, sea, rail, and road. For instance, a company that manufactures automobiles in Germany may need to transport the vehicles by truck to a nearby port, load them onto a cargo ship for overseas transport, and then use rail or truck again for final delivery to dealerships in another country.
4. Cross-Docking: Cross-docking is a logistics technique where goods are directly transferred from the inbound transportation vehicle to the outbound vehicle without being stored in a warehouse. This approach minimizes storage costs and reduces transit times. An example is when fresh produce is imported from various countries and cross-docked at a central distribution center before getting distributed to regional grocery stores.
5. International Supply Chain Integration: Effective international logistics requires seamless coordination and integration across the entire supply chain. For instance, a global electronics manufacturer must work closely with suppliers, transportation providers, and distributors to ensure the availability of necessary components, timely production, and efficient delivery to customers worldwide.
6. Reverse Logistics: International logistics also includes managing the reverse flow of goods, such as returns, repairs, and recycling. For example, a multinational e-commerce company needs to handle return shipments from customers in different countries, manage repair processes, and ensure proper disposal or recycling of damaged or obsolete products.
These are just a few examples of international logistics, which illustrate the complexity and importance of managing the movement of goods across borders. Efficient international logistics can lead to reduced costs, improved delivery times, enhanced customer satisfaction, and increased competitiveness in global markets.
Four Critical Elements of International Logistics
It must be remembered that transport does not improve a product at best it will do it no harm. A faulty product is not fixed simply because it is transported between two places. However, a good product can quite easily be made defective because it has been transported between two places
With all this in mind, there are four major important elements of international logistics that are critical to cargo movements.
1. Integrity
The integrity of the consignment is probably the most critical element of transportation. At the end of the journey the consignee is entitled to receive a product that is in accordance with the contractual requirements. It is very likely that when the product left the seller’s premises the product was in good condition and in conformity with the contractual requirements, but what has happened during transportation? Was the product pilfered? Did it arrive damaged, or was it improperly handled/treated during transportation? In other words, has it been tampered with? To build quality assurance in the transportation of products, some practices, now fairly well established, are useful. In the case of temperature critical products, for example, it is customary to include a temperature monitor (or several of these) in one consignment. If the product is traveling by air, it is also usual to put ice inside shipping boxes.
To minimize breakdown of consignment integrity, the consignor of the goods needs to properly pack and label the consignment in accordance with the contractual requirements and provide written instructions to the carrier on how to handle the cargo. Where problems arise, records should be detailed in an exception report and monitored accordingly. Where similar events take place over a period of time, it may be necessary to consider alternative arrangements including changing the carrier, routing or handling agents.
2. Pedigree
Where did the product come from? It is important to know the origin of the product both from a product quality perspective and also for customs formalities. Depending on the product in question, traceability to origin may be regulated, such as in the case of meat in the European Union. The label on packs of meat sold in supermarkets must display its origin. This requirement arose from the Mad Cow disease and subsequent Foot and Mouth disease outbreaks. If a firm is operating under these circumstances, then traceability assumes greater importance. This leads us to the next point.
3. Chain of Custody
Who handled it? The handling of the product from a physical perspective will directly impact the integrity of the consignment. Rough handling puts stress on the product with the possibility of latent damage downstream or more immediately apparent problems in the case of obviously damaged goods. From a risk management point of view, it is important to know who has custody of the goods and at which stage of the transport process, in order to identify the party responsible and liable for delays and the compromising of the consignment. This leads us to the last point.
4. Track and Trace
Where is it? Transport visibility is desirable because it enables us to pinpoint exactly where the consignment is at any stage of the process. This enables us to plan for the timely arrival of goods or devise contingency plans in case of delays. For manufacturing firms following the principles of just-in-time and typically carrying minimal buffer stock, early warning of delays is vital in triggering alternate action plans to avoid shutdowns of production lines. Visibility also enables us to evaluate the performance of the carrier against either industry standards or delivery promises. It is very common for carriers to provide track and trace options free of charge via the internet, providing virtually real time information.
