International Logistics: How It Works And Issues Faced
To effectively manage an export business, you must track its many moving parts, including logistics, find the right trade finance solution, ensure quality standards, and manage all the export-related paperwork. Managing logistics becomes even more critical when you operate an export business.
You must understand and manage international logistics. International logistics involves coordinating and controlling the movement of goods from one country to another. This includes storing, moving, and tracking goods throughout the delivery lifecycle. You must also manage all the documentation during this process, such as the bill of lading, shipping bill, delivery receipts, export-related forms, and quality-related certificates.
What are the critical components of international logistics?
Here are the various components of international logistics:
Transportation: When you export goods, they can be transported by various means, such as road, rail, air, or sea, depending on the location of your unit, the urgency of the order, the port or airport you use, and more.
● Also Read: What is IDPMS?
Another essential stakeholder is the freight forwarders, intermediaries between the transporters and the exporters. They ensure the documentation is correct and organize shipments.
Customs clearance: Each country has its own customs regulations that track, control, and monitor entry and exit into the country. As an exporter, you must meet all documentation requirements, such as the certificate of origin, inspection certificate, and export license. Accurate and timely compliance with customs requirements is crucial to avoid delays or penalties.
Warehousing: During the export process, the goods must be stored as part of the international logistics process. In the country of origin, it can be in a warehouse at the port or at the destination country.
Packing: When transporting goods across borders, packaging protects the goods during the transit process to ensure that the quality of the goods is undamaged. Many countries also have different norms for packaging different goods, especially if they are perishable or hazardous. These norms can include conditions like fumigation requirements for wooden pallets.
Documentation: In the export business, there are numerous documents like the following:
● Bill of lading: This is a document which acknowledges the cargo receipt by the carrier
● Certificate of origin: This certificate specifies the goods’ origin country
● Insurance certificate: This confirms that the goods are insured during transit
● Commercial invoice: This document has the quantity, description, and the value of the goods
Insurance: Since goods are transported from one place to another via various modes of transportation and stored at multiple points, ensuring them is crucial. Cargo insurance protects the goods against damage, theft, or loss during transit.
What is the process for exporting goods?
At this point, we will look at the preparation the seller or exporter must undertake for a seamless export process.
Groundwork: The first steps for an exporter are obtaining the necessary licenses or permits, identifying markets, and securing orders from buyers.
Documentation: The next step is to collect shipping documentation, including a commercial invoice, certificates, and the bill of lading.
Customs compliance: Compliance with import and export regulations of both the seller’s and buyer’s countries is essential to prevent delays or legal issues. This includes preparing the declaration forms for customs and paying duties and taxes.
Transportation: The seller must coordinate with road transport or railways to reach the port from which the goods will be either sent by ship or, in some cases, it can be the airport where they will be sent by air.
Warehousing: Depending on the transit timing, the goods may be stored at different places and for differing periods. After they reach the destination port or airport, they may need to be stored even as customs in the destination country are cleared.
What are the challenges in international logistics?
Since international logistics involves planning for the movement and storage of goods across borders, exporters have to face many challenges, some of which are listed below:
Customs delays: Any delay in the customs at the exit point will delay the delivery of goods, and customs at the entry of goods in the foreign country can result in damaged goods or fines due to delays.
Regulatory requirements: Each country has rules for the entry of goods, including tariffs, fines, etc., and exporters must learn and have proper documentation and certificates to navigate these intricacies.
Currency fluctuations and freight costs: Transportation costs can add to the cost and eat into the profit margins. It requires intricate planning to ensure that costs are limited. In the same way, currency fluctuations can affect the cost of transportation in the destination country.
Damage or loss risks: Since the goods are transported across long distances through various means, stored at multiple points, and subjected to different weather conditions, there’s a risk of loss or damage.
Environmental impact: Companies must reduce the environmental impact of logistics, which can lead to higher costs or changes in shipping methods.
International logistics is an essential cog in the wheel of export trade and must be planned well. However, when it comes to inward remittance of funds, an advanced platform like LeRemitt can help you at every stage. Explore the LeRemitt platform today to simplify your international remittances at zero forex margin.
