Source: International Business (1998). Fifth Edition.

Zinkota, M., Ronkainen, I., and Moffett, M. Fort Worth:

The Dryden Press

INTERNATIONAL
LOGISTICS
I - INTRODUCTION
• For the international firm, customer locations
and sourcing opportunities are widely
dispersed. The firm can attain a strategically
advantageous position only if it is able to
successfully manage complex networks,
consisting of its vendors, suppliers, other third
parties, and its customers.

• Logistics costs comprise between 10% and 30%

of the total landed costs of an international
order. Thus, international logistics is a
competitive tool.

• Effective international logistics and supply-

chain management can produce higher
earnings and greater corporate efficiency.
 II - DEFINITION
International Logistics is design and management
of a system that controls the flow of materials
into, through, and out of the international
corporation.

By taking a systems approach, the firm explicitly

recognizes the linkages among the traditionally
separate logistics components within and outside
the corporation

Basic goal of logistics: effective coordination

of:
A – Materials Management: timely movement of
raw materials Parts, and supplies into and
through the firm; and

B - Physical Distribution: movements of the

firm’s finished products to its customers.
III - SUPPLY MANAGEMENT
Supply-Chain Management: a series of value-
adding activities connect a company’s supply side
with its demand side.

This approach views the supply chain of the

entire extended enterprise, beginning with the
supplier’s suppliers and ending with consumers
or end users.

Close collaboration with suppliers is required to

develop a just-in-time inventory system, which in
turn may be crucial to maintaining manufacturing
costs at globally competitive levels.

In the U.S. 40% of shipments are under a just-in-

time/quick response regime.
A – Differences between Domestic and
International Logistics
¤ Distance
¤ Currency variation
¤ Border-Crossing Process (additional
intermediaries)
¤ Transportation modes
¤ Packaging and Labeling requirements
¤ Infrastructure
B – International Transportation Issues

¤ Some countries may have excellent inbound and

outbound transportation systems but weak
internal transportation links.
¤ New routs of commerce have opened up
¤ Extreme variations also exist in the frequency
of transportation services.
C – Availability of Modes
¤ Ocean Shipping: liner service (regularly
scheduled passage); tramp service (available for
irregular routes and scheduled on demand)

¤ Container ships, Roll-on-Roll-off (RORO)

¤ Air Shipping

D – Choice of Modes

¤ Predictability: tracking

¤ Transit Time

¤ Noneconomic Factors
 IV - EXPORT
DOCUMENTATION AND
TERMS
A – Bill of Lading: contract between the exporter
and the carrier indicating that the carrier has
accepted responsibility for the goods and will
provide transportation in return for payment.

B – Commercial Invoice: is a bill for the goods

stating basic information about the transaction,
including a description of the merchandise, total
cost, address of the shipper and seller, and
delivery and payment terms
 V - INCOTERMS
The responsibilities of the buyer and the seller
should be spelled out as they relate to what is
and what is not included in the price quotation
and when ownership of goods passes from seller
to buyer.

Incoterms: are the internationally accepted

standard definition for terms of sale by the
International Chamber of Commerce.

A – Ex-works(EXW) : apply only at the point of

origin

B – Free Carrier (FCA): applies only at a

designated inland shipping point

C – Free Alongside Ship (FAS): exporter quotes a

price for the goods, including charges for delivery
of the goods alongside a vessel at the port.
D – Free on Board (FOB): applies only to vessel
shipments. The seller quotes a price covering all
expenses up to and including delivery of goods.

E – Cost and Freight (CFR): seller quotes a price

for the goods, including the cost of transportation
to the named port of debarkation.

F – Cost, Insurance, and Freight (CIF): price

includes insurance, all transportation, and port
charges, documentation charges, freight
fowarder fees, and other insurance charges.

G – Delivery Duty Paid (DDD): the seller delivers

the goods, with import duties paid, including
inland transportation from import point to the
buyers premises
 VI – INTERNATIONAL
PACKAGING ISSUES
Packaging is of particular importance in
international logistics because it is instrumental
in getting the merchandise to the ultimate
destination in a:

a) Safe
b) Maintainable, and
c) Presentable condition

The responsibility for appropriate packaging rests

with the shipper of goods!!
Packaging decisions must take into account:

a) climate
b) weight of packaging
c) packaging material

Stresses in Intermodal Movement:

a) Acceleration, vibrations
b) Dropping Impact
c) Rolling, Swaying