This book is about international logistics and the role of international logistics systems in global supply chain management. International means that it will deal with transactions involving individuals or firms in more than one nation. Logistics means the organized movement of goods, services, and, sometimes, people. Logistics was originally a military term encompassing the processes to supply combat and troop support. In trade, logistics handles the physical movement of products between one or more participants in the supply chain. When we speak of international logistics systems, we mean the complex web of carriers, forwarders, bankers, information and communication companies, traders, and so on that facilitate international transactions, trades, and movements of goods and services. Global supply chain management refers to the complex integration of processes necessary to manage materials from their point of origin through manufacturing and shipment to the final consumer (or beyond, in the case of recycling).
International Logistics Second Edition This Page Intentionally Left Blank International Logistics Second Edition Donald F Wood San Francisco State University Anthony P Barone Independent Consultant Paul R Murphy John Carroll University Daniel L Wardlow San Francisco State University American Management Association New York • Atlanta • Brussels • Buenos Aires • Chicago • London • Mexico City San Francisco • Shanghai • Tokyo • Toronto • Washington, D.C Special discounts on bulk quantities of AMACOM books are available to corporations, professional associations, and other organizations For details, contact Special Sales Department, AMACOM, a division of American Management Association, 1601 Broadway, New York, NY 10019 Tel.: 212-903-8316 Fax: 212-903-8083 Web site: www.amacombooks.org This publication is designed to provide accurate and authoritative information in regard to the subject matter covered It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service If legal advice or other expert assistance is required, the services of a competent professional person should be sought Library of Congress Cataloging-in-Publication Data International logistics / Donald F Wood [et al.]—2nd ed p cm Includes bibliographical references and index ISBN 0-8144-0666-1 Physical distribution of goods—Management Business logistics International trade I Wood, Donald F., 19353 HF5415.7 I553 2002 658.7—dc21 2002004267 © 2002 AMACOM, a division of American Management Association All rights reserved Printed in the United States of America This publication may not be reproduced, stored in a retrieval system, or transmitted in whole or in part, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of AMACOM, a division of American Management Association, 1601 Broadway, New York, NY 10019 Printing number 10 Contents Preface Preface to the First Edition xi xiii Overview International Logistics for the Firm Outline for This Book Summary End-of-Chapter Questions Case: WWE: Emergency Response to Terrorism 10 10 10 Governments’ Interest and Involvement in International Logistics Introduction Economic Importance National Defense Concerns Export Controls on Strategic Materials Boycotts and Antiboycotts Controls on Imports Government Support for Its International Carriers Port State Control and Flags of Convenience Controls on International Aviation Labor Unions Environmental Issues Multigovernment Programs Summary End-of-Chapter Questions Case: Port of Short Beach 14 14 14 16 21 23 25 25 30 32 35 36 38 39 40 40 vi / Contents Logistics in Different Parts of the World Introduction Getting Started Understanding Cultural Differences The Cultural Environment: Beliefs, Values, Customs Managing Differences with U.S Cultural Values Language Differences Logistical Development in Different Nations The First World: An Evolved Logistics Infrastructure The Emerging Nations The Third World Trade Blocs Summary End-of-Chapter Questions Case: Minex Phosphates 47 47 48 50 51 52 54 55 56 61 65 75 83 83 85 Ocean Ships and Shipping Introduction Cargo Types Vessels and Vessel Characteristics Vessel Types Vessel Ownership by Nation Shipbuilding Summary End-of-Chapter Questions Case: Macao Wastebaskets 89 89 90 95 98 110 110 111 112 112 Chartering Bulk Ocean Carriers Introduction Patterns of the World’s Bulk Shipping The Supply of Shipping Types of Charter Arrangements The Charter Agreement Summary End-of-Chapter Questions Case: Coals to Newcastle 115 115 118 126 128 132 136 137 137 The Ocean Liner Contract System Introduction Ocean Liner Conferences Relationships Among Conference Members Conferences and Competition Conference Relationship with Shippers Conference Relationship with Governments Publishing Rates Service Contracts 140 140 141 143 146 148 149 153 162 Contents / vii Summary End-of-Chapter Questions Case: Gitomer Container Leasing Company 163 164 164 International Air Transportation Introduction Development of Aviation World War II Commercial Jet Airliners The Emery-SRI Report Wide-Bodied Jets Air Cargo Containers The Airline Industry Rate Making and Rates Air Cargo Documentation and Insurance Air Cargo Growth Summary End-of-Chapter Questions Case: Burt & Gert’s Forwarding Co 168 168 169 172 173 174 176 179 179 188 193 194 196 196 197 Surface Transport to and from Ports, and to and from Canada and Mexico Introduction Movements to and from Ports Intermodalism Land Transportation to and from Canada and Mexico Summary End-of-Chapter Questions Case: Kokomo Diesels 200 200 201 203 216 222 222 223 Seaports, Airports, Canals, and Tunnels Introduction Seaports Airports Canals, Tunnels, and Bridges Summary End-of-Chapter Questions Case: Paula’s Food Products 225 225 225 235 240 243 243 244 International Logistics Functions and Intermediaries Introduction Outbound Logistics Functions Inbound Logistics Functions Overall Logistics Activities Logistics Intermediaries Summary 246 246 248 252 255 265 270 10 viii / Contents End-of-Chapter Questions Case: Betty’s Brownies Terms of Sale and Payment Introduction Terms of Sale Selling Terms Terms of Payment Summary End-of-Chapter Questions Case: Van Bemmel Steamship Company 271 272 274 274 274 278 287 305 306 306 12 Documentation and Insurance Introduction Documentation Cargo Insurance Hull Insurance Air Cargo Insurance Land Transport Settlement of Insurance Claims Summary End-of-Chapter Questions Case: The Great Bite Peach Company 309 309 311 325 333 335 336 336 338 338 339 13 Logistics of Export Product Movement Introduction International Transaction Channel Activities and Their Influence on the Movement of Goods through the Distribution Channel The International Distribution Channel Hazardous Materials Transportation Friction or Fraud in the Distribution Channel? Summary End-of-Chapter Questions Case: Manwell Toy Importers 342 342 343 345 359 362 363 364 364 International Sourcing Introduction Why Source Globally? Designing a Global Sourcing System Global Sourcing and Procurement Monitoring and Improving Issues in Importing and Exporting Summary End-of-Chapter Questions Case: Barbara’s Blouses 367 367 368 372 373 382 383 386 387 387 11 14 Contents / ix 15 16 17 Logistics of Famine Relief Introduction Famine Relief Logistics Command and Control Demand Forecasting Sourcing Packaging Managing Inventories Site (or Route) Selection Warehousing and Storage Transport Documentation Parts and Service Support “Customer” Service Summary End-of-Chapter Questions Case: Famine Relief in East Africa The Role of Logistics in International Supply Chain Management Introduction The Global Business Climate and International Logistics and Supply Chain Management Two Strategic Approaches for Global Supply Chain Management The Coordinating Role of International Logistics in Supply Chain Management Managing Successful Global Supply Chain Collaboration Summary End-of-Chapter Questions Case: Fedco Fasteners Future Issues in International Logistics Introduction Increased Use of World-Class Logistics Practices Multi-Country Trade Alliances One-Stop Shopping Concept Amodalism Environmental Concerns Space Transport and Exploration The Internet Summary End-of-Chapter Questions Case: Global Trust Company 389 389 389 392 393 395 395 396 397 398 399 402 403 404 404 404 405 412 412 413 416 419 423 426 426 426 429 429 429 430 430 431 431 432 432 433 433 434