International Marketing Practices

Chapter 4: Logistics in Export Operations Logistics, or the movement of goods from producer to consumer, can be the most challenging aspect of an exporting operation, typically involving a number of transport methods, longer transit times than in domestic shipping, language barriers, currency differences, variable regulatory requirements, and economic risks. Logistics involves identifying effective shipping methods and routes, arranging transportation, loading goods, preparing documentation, and monitoring shipment status up until delivery. Logistics decisions can be overwhelming for a small to medium sized company. This chapter outlines effective logistics management practices, beginning with an explanation of the international commerce terms that affect both costs and risk incurred by the exporter. International Commerce Terms (Incoterms ® ) Before engaging in international trade, it is essential to understand the role of International Commercial Terms, known as Incoterms ® , which define the terms of trade for the sale of goods, including costs and responsibilities. Incoterms are published and maintained by the International Chamber of Commerce (ICC), which works to promote trade based on free and fair competition, and has over 6 million members worldwide [156]. The most recently revised Incoterms were published in 2010, and they were the eighth revision to the original 1936 publication [20]. Put simply, Incoterms “ define the geographical point where the risks and costs of the exporter and importer begin and end ” [23]. They help to clearly define the responsibilities to the parties involved in international trade, eliminating confusion and providing a common language. It is important to note that Incoterms themselves are not definitively upheld by the courts, but once two parties, the supplier and buyer, agree and sign a legally binding document, they become enforceable [20]. Figure 9 presents information on points of exchange, where responsibility and ownership transfer between suppliers and buyers in international commerce. It is important to understand the topics included in Incoterms, such as transportation, insurance, and ownership. Transportation of goods happens by truck, train, sea, air, or a combination, with each mode of transportation having advantages and disadvantages, explained later in this chapter. Insurance is important to mitigate much of the risk involved, such as damages or loss of the product. Finally, ownership can be defined as the legal holder of a product, assuming all risks and responsibility.

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