Fundamentals of International Trade Logistics and Transport

Posted on Mar 28, 2025 in Business Administration and Innovation Management

WTO Trade Principles

Key principles governing international trade according to the World Trade Organization (WTO):

  • Non-discrimination: Equal treatment between countries.
  • Environmental Protection: Consideration for environmental sustainability.
  • Transparency: Clear and accessible trade rules and regulations.
  • Avoiding Trade Barriers: Reducing obstacles to international trade.
  • Competitiveness: Eliminating unfair practices to ensure fair competition.

International Freight Transport Characteristics

  • Longer distances and transit times compared to domestic transport.
  • Involvement of multiple participants (shippers, carriers, forwarders, customs, etc.).
  • Complex customs procedures and documentation requirements.
  • Increased risk of loss or damage, necessitating insurance coverage.
  • Specific packing and packaging regulations to ensure safety and compliance.

Transport Operation Stages

  1. Static or Preparation Stage: Focuses on the physical protection of goods (packing, labeling, documentation).
  2. Dynamic or Movement Stage: Involves the use of vehicles for transportation along the planned itinerary.

Transport Modes

Land Transport

Road

  • Advantages: Door-to-door delivery, speed, relative cost-effectiveness.
  • Disadvantages: Air pollution and environmental impact, limited weight/volume capacity compared to other modes.

Rail

  • Advantages: Lower cost and environmental impact than road, lower accident rate.
  • Disadvantages: Slower transit times, limitations on cargo size and destination accessibility (requires rail infrastructure).

Pipeline

  • Advantages: Convenient and economical for specific commodities.
  • Disadvantages: Suitable only for liquids and gases, high initial installation and ongoing maintenance costs. Pipelines can be thousands of miles long, running underground, under the seabed, and connecting cities, countries, and continents.

Air Transport

  • Advantages: Fastest mode, high level of safety and security.
  • Disadvantages: Most expensive mode, generally suitable only for smaller, high-value, or time-sensitive shipments.

Water Transport

  • Advantages: Very cost-effective, suitable for large volumes and long distances.
  • Disadvantages: Slowest transport mode.

Loading Methods

  • Lo/Lo (Lift-on/Lift-off): Cargo is loaded and unloaded using cranes and derricks.
  • Ro/Ro (Roll-on/Roll-off): Vehicles (cars, trucks) with their cargo can be driven directly on and off ships equipped with ramps.

Key Roles and Organizations

Freight Forwarder

Individuals or organizations, often large, offering domestic or international freight services. They may specialize in specific countries or trade lanes. Freight forwarders are experts in supply chain management, including services like warehousing and packing. They handle all necessary processing and transport documentation.

Key Parties in Shipment

  • Shipper: The party (person or company) who hires the transportation service.
  • Carrier: The party (person or company) responsible for the actual transportation of goods.
  • Consignee: The party (person or company) designated to receive the shipment and often financially responsible for it.

Industry Organizations and Standards Bodies

  • FIATA: International Federation of Freight Forwarders Associations.
  • BIMCO: Organization focused on the shipping industry, providing standard contracts and clauses.
  • ASTIC: Spanish association providing commercial transport information.
  • IATA: International Air Transport Association, setting standards for air transport.
  • ISO (International Organization for Standardization): Develops and publishes international standards for various products, services, and processes, including packaging.

Transport Concepts and Regulations

Intermodal vs. Multimodal Transport

  • Intermodal Transport: The movement of cargo from origin to destination using several modes of transport (e.g., truck, rail, ship), with a separate contract for each leg of the journey involving multiple carriers.
  • Multimodal Transport: Similar to intermodal transport in using multiple modes, but the entire journey is covered under a single contract with one carrier who takes responsibility for the entire transport chain.

Domestic Transport

The transportation of goods solely within the borders of a single country.

International Transport Conventions

Agreements governing liability and documentation for different transport modes:

  • CMR: Convention on the Contract for the International Carriage of Goods by Road.
  • CIM: Convention concerning International Carriage by Rail.
  • Hague-Visby / Rotterdam Rules: Conventions governing contracts for the carriage of goods by Sea.
  • Montreal Convention: Convention for the Unification of Certain Rules for International Carriage by Air.
  • Geneva Convention: UN Convention on International Multimodal Transport of Goods.

Packaging, Handling, and Standards

Packing and Packaging Definitions

  • Packing: The process and materials used primarily to protect sensitive substances or products that are difficult to conserve, transport, and use. Often refers to the primary containment.
  • Packaging: Encompasses materials and techniques used for the protection, handling, identification, and containment of goods. It must protect goods from physical damage and facilitate easy handling.

EUR Pallet Specifications

  • Standard European pallet size: 800mm x 1200mm.
  • Weight: Approximately 27 kg.
  • Load Capacity: Up to 4000 kg (static load), up to 1000 kg (dynamic load).

ISPM-15 Standard

International Standards for Phytosanitary Measures No. 15 (ISPM-15) is a regulation for wood packaging material (WPM) in international trade. It aims to prevent the international transport and spread of diseases and insects (pests, parasites) that could negatively affect plants or ecosystems. Wood packaging must be treated (heat treatment or fumigation) and marked.

Bar Codes in Logistics

Invented by Bernard Silver and Norman Joseph Woodland (patented 1952), the bar code system using black lines and white spaces provides machine-readable information. George J. Laurer developed the Universal Product Code (UPC) used commercially from 1973. Bar codes are essential in nearly every sector, crucial for inventory management and tracking goods throughout the supply chain. New regulations, especially in pharmaceutical and food industries, require more detailed product information via bar codes to enhance consumer protection.

Logistics Equipment Vocabulary

  • Reach Stacker: Heavy-duty vehicle for handling and stacking shipping containers in terminals.
  • Gantry Crane: Large crane, often spanning a workspace or railway line, used for lifting heavy objects (e.g., containers).
  • Transtainer (RTG/RMG): Rail-Mounted Gantry crane (RMG) or Rubber-Tyred Gantry crane (RTG) used for stacking containers at terminals.
  • Swap Body: Demountable freight container, often curtain-sided, equipped with legs for independent standing.
  • Flat Rack: Container base with fixed or collapsible ends, used for oversized or heavy cargo.
  • Tank Container (Tanktainer): Reinforced container frame housing a tank for transporting liquids, gases, or powders.
  • Reefer Container: Refrigerated container used for temperature-sensitive cargo.