CHAPTER 12 International Logistics

© 2008 Prentice Hall 12-2 Learning Objectives F To identify the reasons for governmental intervention in the area of international trade F To distinguish among the unique activities of international trade specialists

© 2008 Prentice Hall 12-3 Learning Objectives F To examine issues involved in international air transportation F To relate activities involved in international ocean transportation

© 2008 Prentice Hall 12-4 International Logistics F Key Terms –Customs house brokers –Export management company –Export packers F Key Terms –Export trading company –Import quotas –Incoterms 2000

© 2008 Prentice Hall 12-5 International Logistics F Key Terms –International Air Transport Association (IATA) –International freight forwarders –Irrevocable letter of credit –Land bridge F Key Terms –Nontariff barrier –Nonvessel- operating common carrier (NVOCC) –Shippers associations –Shipping conferences

© 2008 Prentice Hall 12-6 International Logistics F Changes to political landscape affect logistics –The end of Soviet rule in Eastern Europe –EU economic integration u Nontariff barriers-a rule that has the effect of reducing imports u Restrictions on truck traffic, forcing freight onto rail and water –NAFTA F Multinational firms

© 2008 Prentice Hall 12-7 International Marketing F Size or scale of firms may be different F Firms selling products under their own brand are concerned about quality maintenance F Consumer preferences differ F International credit system is not well developed –Irrevocable letter of credit

© 2008 Prentice Hall 12-8 Figure 12-2: Irrevocable Letter of Credit

© 2008 Prentice Hall 12-9 International Marketing Channels F Domestic (U.S.) channels –Ownership –Negotiations –Financing –Promotions –Logistics F International channel additions –Documentation

© 2008 Prentice Hall Terms of Sale— Incoterms 2000 F EX-Works (EXW) F FCA (Free Carrier) F FAS (Free Alongside Ship) F FOB (Free on Board) F CFR (Cost and Freight) F CPT (Carriage Paid To) F CIF (Cost, Insurance, and Freight) F CIP (Carriage and Insurance Paid To) F DES (Delivered Ex Ship) F DEQ (Delivered Ex Quay) F DAF (Delivered at Frontier) F DDP (Delivered Duty Paid) F DDU (Delivered Duty Unpaid)

© 2008 Prentice Hall Government Influences on Foreign Trade F 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

© 2008 Prentice Hall Government’s Role in International Transport F International carriage is an export to the nation operating the carrier-affects balance of payments F International fleets and airlines may be subsidized F Large nations must protect their flag carriers’ interests

© 2008 Prentice Hall International Trade and Supply Chain Specialists F 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

© 2008 Prentice Hall International Trade and Supply Chain Specialists F Nonvessel-operating common carrier (NVOCC) F Customs house brokers F Export management company F Export trading company F Shippers associations –Shipping conferences F Export packers

© 2008 Prentice Hall Figure 12-4: A Forwarder’s Export Quotation Sheet Showing Factors to Include When Determining a Price Quote

© 2008 Prentice Hall Figure 12-9: A Package Marked for Export

© 2008 Prentice Hall Logistics Channels in International Distribution F Landward move to the port or airport in exporting country F International air F International ocean shipping F Landward leg in importing country

© 2008 Prentice Hall Movement to Port or Airport F To adjacent countries, move is similar to domestic, with more paperwork F To ports –Use containerization –Land bridge operations F To airports –Chartered aircraft –Scheduled air carriers –Integrated air carriers –International Air Transport Association (IATA)

© 2008 Prentice Hall Figure 12-12: Large Containers Used by International Airlines

© 2008 Prentice Hall Ocean Shipping F Types of Ocean Cargo –Petroleum –Dry-bulk cargoes-grain, ores, sulfur, sugar, scrap iron, coal, lumber, logs in vessel loads –Containers F Shipping conferences and alliances pool resources and extend market coverage

© 2008 Prentice Hall Ocean Shipping F Types of Vessels –Containerships –Lighter aboard ship (LASH) vessels –Roll On-Roll Off (RO-RO) vessels –Tankers –Parcel Tankers –Tramps –Specialized vessels

© 2008 Prentice Hall Figure 12-17: A RO-RO Vessel in Jacksonville, Florida

© 2008 Prentice Hall Surface Transport in Importing Countries F Few foreign nations have as wide a range of modes as in the United States F Transportation nationalization is higher in most countries other than the United States F Ship owners are becoming involved in land transport F Short sea shipping along coasts F Rail gauges vary around the world

© 2008 Prentice Hall International Trade Inventories F May vary in small ways from country to country—products may be tailored to fit F Less is needed (than in U.S.) to serve any one country F Return items are impossible to accommodate F Import and export quotas affect value of inventories F Currency and language differences