International

Marketing
Second Edition

Rakesh Mohan Joshi

© Oxford University Press 2015. All rights
reserved.
 Chapter 18
International Trade
Logistics and Shipping

© Oxford University Press 2015. All rights

reserved.
 Learning Objectives
• To explain the concept of international trade logistics
• To learn how to manage logistics and cargo shipping
• To discuss key concepts and issues of maritime transportation
in international trade
• To elaborate containerisation and multi-modal transportation
• To discuss institutional framework for maritime transport in
India.

© Oxford University Press 2015. All rights

reserved.
Managing logistics in international markets is much more
complex due to physical distance, differences in logistics
systems and their compatibility, different legal systems,
and numerous intermediaries involved. However, the
principal objective of any logistics system remains that
the goods reach the final customers in the following
manner

– In correct quantity
– At desired location
– At right time
– In usable condition
– In the most cost efficient manner

© Oxford University Press 2015. All rights

reserved.
Concept of International Logistics
Conceptualization, design, and implementation of a system for
direct flow of goods and services across national borders is
termed as ‘international logistics’.
Two distinct components of logistics:

– Materials Management
– Physical Distribution

© Oxford University Press 2015. All rights

reserved.
 Logistics and the Value Chain Concept
• The objective of any business firm is to create value by way of
performing a set of activities such as to conceptualize, design,
manufacture, market, and service its market offerings.
• This set of interrelated activities is termed as value chain.
• To gain competitive advantage over its rivals, a firm must
provide comparable buyer value by performing activities more
efficiently than its competitors (lower cost) or by performing
activities in a unique way that creates greater buyer value and
commands a premium price (differentiation) or accomplishes
both.

© Oxford University Press 2015. All rights

reserved.
 Logistics Performance Index
• The Logistics Performance Index developed by the
World Bank is a bench-marking tool to measure
performance along the logistics supply chain among
countries.
• The index comprises of several areas of supply chain
performance elaborated, such as customs procedures,
logistics costs, quality of infrastructure, the ability to
track and trace shipments, timeliness in reaching
destination, and the competence of the domestic
logistics industry.
© Oxford University Press 2015. All rights
reserved.
 Managing International Logistics

A typical logistics system consists of :

– Warehousing
– Inventory management
– Packing and unitization

– Information and communication technology (ICT)

– Transportation

© Oxford University Press 2015. All rights

reserved.
 Third Party Logistics
(3PL)
• Third Party Logistics (3PL) provider refers to a
company that provides multiple logistics
services for its clients and customers.
• Thus, outsourcing of more sophisticated
logistics and supply chain services, especially
on a global scale may be defined as Third Party
Logistics (3PL).

© Oxford University Press 2015. All rights

reserved.
 Maritime Transportation in
International Trade
• Ocean transport is the oldest mode of
international business; a large number of shipping
practices are derived by the customs of trade.
• An international sales agreement and
arrangement of transport goes hand in hand.
• Therefore, managers operating in international
markets need to develop a thorough
understanding of the shipping practices.

© Oxford University Press 2015. All rights

reserved.
 Types of Ocean Cargo

Bulk Cargo
Cargo that is loaded and carried in bulk, without mark or
count, in a loose unpackaged form, having homogenous
characteristics is termed as bulk cargo.

Containerized Cargo
Cargo loaded at a facility away from the pier or at a
warehouse into a metal container usually 20 to 40 feet long, 8
feet high, and 8 feet wide.

© Oxford University Press 2015. All rights

reserved.
 Types of Commercial Vessels

• Dead weight tons (dwt)

• Gross registered tonnage (GRT)
• Net registered tonnage (NRT)
• Displacement tonnage

• Light tonnage

© Oxford University Press 2015. All rights

reserved.
 Charter Shipping
• For shipment of bulk cargo, such as grain, coal, ores,
fertilisers, and oil which are to be carried in complete
ship-loads, charter shipping is often used.
• It is also known as trump shipping.
• The charter vessel does not have any fixed itinerary or
fixed sailing schedule.
• These can be hired or engaged to ship the firm’s cargo
on charter basis as per the terms and conditions of
the charter party.
© Oxford University Press 2015. All rights
reserved.
 Liner Shipping
• Regular scheduled vessel services between two
ports are termed as liner shipping.
• Generally, it is used for cargo with higher unit value
and manufacture and semi-manufacture goods.
• The shipping lines offer speedier shipping services,
i.e., services useful for goods that are prone to
market fluctuations due to changes in fashion,
designs, season, technology, etc.

© Oxford University Press 2015. All rights

reserved.
 Containerization Transportation

• Containerization has been the most significant

development in cargo transportation and industry.
• Major benefits offered by transportation through
containers include:

 Substantial reduction in risk of damaged to the goods during

transport due to pilferage or mishandling
 Cargo arrival in good condition at final destination creating a
positive impact on the buyer’s perception
 No cargo damage due to mishandling during trans-shipments

© Oxford University Press 2015. All rights

reserved.
 ‘Multi-modal’ or ‘Inter-modal’ Transportation

• ‘Multi-modal’ or ‘Inter-modal’ transport means

transport of goods by at least two different
modes of transport, such as rail, road, sea, or air.
• Multi-modal transportation has revolutionized
the carriage of goods in international trade.
• It covers the door-to-door movement of goods
under the responsibility of a single transport
operator.
© Oxford University Press 2015. All rights
reserved.
 International Organizations Associated with
International Maritime Transportation

• International Maritime Organization (IMO)

• United Nations Conference on Trade and
Development (UNCTAD)
• World Customs Organizations (WCO)

• International Organization for Standardization (ISO)

• International Labour Organization (ILO)
© Oxford University Press 2015. All rights
reserved.
 Institutional Framework for
Maritime Transport in India
To regulate maritime transport, India has a comprehensive set
of institutions that often compliment each other’s activities as
discussed below

– Ministry of Shipping
– National Shipping Board
– Directorate General of Shipping
– Shipping Corporation of India Ltd. (SCI)
– Container Corporation (CONCOR) of India

© Oxford University Press 2015. All rights

reserved.
India’s International Shipping Activities
• All ports in India are governed by the statutory framework of Indian
Ports Act 1908.
• Major ports in India are administered by a ‘Port Trust’ and are under
purview of the Central Government whereas non-major ports are
under purview of the State.
• Maritime States Development Council (MSDC) was constituted in May
1997 to have an integrated approach for development of ports in India.
• India encourages private investments and Public Private Partnership
(PPP) for port development and handling.
• It also allows FDI up to 100 per cent for construction and maintenance
of ports and harbours.

© Oxford University Press 2015. All rights

reserved.