Page 165 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes Trends in Marketing
Figure 7.2: Trends in Marketing

Importance of Logistics in Export Management

International trade is becoming a more important part of the GNP in the industrially advanced
countries. Firms in these countries have production centres for markets all over the world.
Shortage of local resources, small size of home market and many other reasons have resulted in
functional centres being maintained in various countries.
A lot of issues that are associated with international transportation of finished goods are
essentially the same as those that apply to transportation in domestic trade. In case of international
operations, goods can be out of the exporter’s control for longer period of time, more
documentation is required, packaging may be more costly and shipping insurance is more
costly.
The transportation options include ocean shipping and containerization as well as air freight.
The basic activities involved in the flow of goods, like transportation, warehousing and holding
of inventories, should be integrated in a systems approach. The systems approach would
recognize the trade-offs, such that sometimes more expensive air freight may be opted for,
instead of less expensive ocean shipping, because of savings in warehouse and inventory costs.
In the field of exports, transport systems in developing countries are generally not as efficient as
in the industrially developed countries. Transportation is often considered to be the most
important single factor of plant location.

Firms in international trade also try to reduce amount of unnecessary product packaging, since
packing material can account for almost 45 per cent of the weight of the products shipped. A
company can reduce inland transportation charges by locating its distribution facilities near to
container ports or airports. The burden of documentation can be reduced through
computerization.
Export management involves marketing in overseas market. As such, the discussions on the
interface of logistics with marketing hold good for the importance of logistics in export
management. Still, export management has certain unique features, to be understood in the
context of importance of logistics to export management.

7.5 Logistics and the Modern Organization

Logistic Management includes the design and administration of systems to control the flow of
material, work-in-progress and finished inventory to support business unit strategy.

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