Chapter 9  International Logistics

9.3 Introduction to International Logistics

9.3.1 Definition of International Logistics

    International logistics is the negotiating, planning and implementing of supporting logistics arrangements between nations, their forces, and agencies. International logistics occurs when:

    （1）A firm exports a portion of a product made or grown, e.g., a firm in the U.S.exports corn to other countries.

    （2）A firm imports raw materials, e.g., a firm in China imports pulpwood from Canada.

    （3）Goods are partially assembled in one country and then shipped to another, where they are further assembled or processed.

    （4）The firm is global in outlook and regards almost all nations as being markets, sources of supply, or sites for markets or for assembly operations. For example, the Ford Motor Company procures many kinds of parts from companies in different countries.

    （5）Because of geography, a nation’s domestic commerce crosses foreign borders, often in bonda.

    The ultimate goal of international logistics is to get the right goods or services to the right place located in a different country, at the right time, with lowest cost and minimum risk, and in the desired condition, by selecting the best way and method, while making the greatest contribution to the firm and the world as a whole.

9.3.2 Features of International Logistics

    International logistics has many of the same fundamental functions as domestic logistics.However, international logistics has much more internationalism, complexity and venture than domestic logi-stics. The main differences are summarized as follows:

    • Logistics environment. The difference of logistics environment among different countries is an important feature of international logistics. These differences are reflected in different aspects, such as domestic laws, culture, language, scientific and technical level, infrastructure and standardization, which will no doubt increase the complexity of international logistics operation.

    • Transportation. Decisions pertaining to international transportation are very complex. Because of the distances involved, there are different transportation modes, different carriers, different transpo-rtation documents, and different transit times. For instance, typical international logistics can require 20 to 30 or more documents than domestic logistics. Banks, insurance companies, freight forwarders, the governments of the exporting country and of the importing country, all have different document requirements.

    • Risks. There may be different risk types in international logistics, such as natural risks in transit, political risks associated with governments, and economic risks （e.g., fluctuation of exchange rate）during the trade process. In the case that there is hostility between two neighboring countries, the customs formalities and commercial activities over the border can be difficult or even impossible.

    • Standardization. As the globalization of business activities has stimulated the growth in interna-tional trade, there is a growing need for international standardization. The establishment of global logistics standardization is very important for a continued growth in international trade and the sub-sequent increase in cargo transportation. So far, the U.S. and Europe almost have achieved standard-ization on logistics instruments and uniform standards of facilities, such as 1000 mm×1200 mm pall-ets, bar code technology, and standard sized containers. However, counties that do not finish stand-ardization may spend more time and expenses on cargo transport, transfer and other aspects, which will definitely lower their international competitiveness.

9.3.3 The Role of Governments in International Logistics

    All nations are interested in international trade and international logistics. The most important re-ason is the benefits of promoting the economy. According to 2014 WTO trade statistics, China was the largest merchandise exporting county in the world, with a value amounting to about US$ 2.34 trillion, followed by European Union（US$ 2.26 trillion）, United States（US$ 1.62 trillion）, and Germany（US$ 1.51 trillion）. 

    The second reason is associated with national defense. In order to protect the local manufacturers, producers, or growers, governments often set up customs（duties）on many goods and establish import quotas. Most countries also strive to stop the spread of plant and animal diseases and there-fore inspect various commodities or products to make sure that they do not have such problems.

    Additionally, governments are more involved in international transportation than they are in domestic transportation. It is known that ocean carriers and international airlines can operate as an extension of a nation’s economy, and most of the revenue they received can flow into that nation. With regard to water transportation, many nations provide subsidies, train their own merchant marine officers, absorb portion of the costs of building commercial ships, and engage in other activities to promote their own merchant fleets.