Managing International Logistics - Transport and Customs

In the 20th century, the notion of international transport was more closely associated with exports of finished goods and imports of raw or semi-finished products. Incoterms had their place and were an important part of contracts.

In the 21st century, trade flows have intensified and changed significantly, and while raw or semi-finished products are still important, it is finished or technological products and components that are the main focus of international trade. So, for example, we buy products that may be "made" in Europe or China, but some components come from all over the world: for example, some Toyota cars are assembled in France, for reasons of logistics costs to a local market (around 100 million high-income consumers within a 500 km radius of the factory), but the various components are manufactured elsewhere in the world, arriving via Antwerp or Rotterdam. The same applies to Airbus, whose assembly lines are in Hamburg and Toulouse (soon to be in China), but whose various parts are manufactured in Europe and 30% of the value in the USA, or elsewhere. In another field, Ikea is able to offer a range of home products at competitive selling prices from all over the world, because the company has almost perfect control of its "logistics" or "supply chain": it designs all its products in Sweden, the way they are often manufactured in Germany, and has them manufactured by a company that masters the necessary technology at a cost acceptable to the European and American consumer. In this way, logistics become a cost factor.

This is directly linked to the increase in ship productivity, thanks to growing specialization, almost systematic containerization, the sharp rise in seaport productivity and the intensive development of road transport. The result has been an impressive drop in freight rates, transforming international transport into "logistics", one of the key elements in the cost of producing or distributing products: the "supply chain".

The "other side of the coin" is the growing dependence of final production and/or consumer markets on a stoppage in production or supply by one of the links in the supply chain. Security of supply is certainly one of the major challenges facing companies and governments in the near future.

This article introduces the new way of thinking about transport as a component of the overall cost of production, rather than as a cost added to the cost of manufacturing or distribution to and from a given country.