The complex conditions of global relations
The general conditions faced by international logistics systems are much more complex than domestic ones. For instance, transport distances increase - and the probability that various forms of transport will have to be combined rises just as the number of required documents does. Furthermore, more institutions are involved and more information must be processed. All in all, the costs of participating companies rise considerably.
The special features of international logistics
Transport distances
The distances that must be covered in international logistics systems are much greater than in domestic logistics systems. This results in longer supply or replenishment times. In addition, greater uncertainty exists, both in terms of forecasts about demand and about adherence to replenishment schedules. As a result, logistics miscalculations could have a greater impact on both service and costs than they would in domestic logistics systems [1].
Means of transport
In international logistics systems, transports are organized with the help of various means of transport. Excluding possible land bridges, international connections are formed by sea and air transports. Inland water transports, highways and railroads are also available for continental shipments. In the creation of international transport chains, means of transport that have widely different technical specifications have to be linked to one another. Furthermore, the means of transport have different cost structures and capabilities. This involves the share of fixed and variable costs and,the share of capital and labor costs as well as speed and network-forming capability. These differences must be considered in rational decisions about the procurement of transport services, particularly the evaluation of individual prices [1].
Institutions
The following graphic shows the variety of institutions that are part of international logistics systems. The institutions used in procurement and sales channels Sales channel can vary from country to country. It is obvious that international logistics systems require more coordination, more communication and more monitoring.
The primary institutions involved in an international logistics transaction
Documents
The variety of institutions involved in international logistics processes leads to an even larger variety of documents that are transmitted among the institutions [2]. Widely used documents include:
| Document | Issued by | Purpose |
|---|---|---|
| Air waybills | Airlines, consolidating forwarders | Air waybills serve as a shipping contract between the shipper and the forwarder. |
| Certificate of origin | Exporter or forwarder in the name of the exporters | The certificate of origin is required by some countries to certify the origin of product components. It is used for statistical or valuation purposes. |
| Commercial invoice | Seller of goods | The commercial invoice is required for customs clearance at the destination site. |
| Dock receipt | Exporter or forwarder in name of the exporter | The dock receipt is used by both the shipper and the forwarder to verify the shipping information, terms and delivery to the forwarder. |
| Ocean bill of lading | Shipping company | The ocean bill of lading is a transport contract between the forwarder and shipper. It details the legal responsibilities of both parties in the shipment as well as shipment details such as total units, weight and destination. |
| Packing list | Exporter | The packing list furnishes detailed information about the content of each load in the shipment. Customs officials use this information during processing and inspection. The packing list is extremely important if complaints about damage or discrepancies arise. |
The most critical documents in international logistics
Source: Fundamentals of Logistics Management | Grans / Lambert / Stock / Ellram 2005
Information
The collection, transmission and transport of the necessary information are processes that are closely associated with the documents. They are not available in the same way at all participating institutions. Missing, inaccurate or late information slows service or raises logistics costs [1].
Recommended reading
Fundamentals of Logistics Management | Grant / Lambert / Stock / Ellram 2005
Logistiksysteme | Pfohl 2004
References
[1] Logistiksysteme | Pfohl 2004
[2] Strategic Logistics Management | Stock / Lambert 2001
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