INTRODUCTION &

IMPORTANCE OF
INTERNATIONAL TRADE
LOGISTICS

DR. RAM SINGH

ASSOCIATE PROFESSOR
INTERNATIONAL TRADE OPERATIONS &
LOGISTICS
INDIAN INSTITUTE OF FOREIGN TRADE
NEW DELHI

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INTRODUCTION
TO TRADE
LOGISTICS

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 UNDERSTANDING TRADE LOGISTICS
 The word ‘Logistics’ has originated from a French
word ‘Loger’ which means “art of transporting”.
 Understanding the field of international trade
logistics require concerted efforts to know the all
elements of international logistics system trade
supply chain, which include tangible elements
like inventory management, packing &
packaging, freight determination and forwarding,
choice of mode of transportation, storage &
warehousing and material handling on the one
hand and understanding of intangible elements
such as customer service, decision support
system, information system and IT applications
etc on the other.
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UNDERSTANDING TRADE LOGISTICS
 international trade logistics is a process where “the
inward logistics of inputs, raw material other
utilities and services start from the base level of
‘generation of the demand’, where such inputs are
processed using money, machine, material and men
and ends with movement of such produced goods
through the ‘process of purchase’ by buyers or
‘supply of material by the vendor’ right through to
‘final acceptance’ by end consumers or users with
enhanced and extended customer services and
concludes with ‘payments to the supplier’ including
the reverse logistics if any and the whole process is
to be considered as “one whole activity” with each
stage having an impact on price, cost and quality of
internationally traded goods or services”.

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 CONCEPT OF INTERNATIONAL TRADE
LOGISTICS
Management Actions
Planning Implementation Control

LOGISTICAL Raw In-Process Finished LOGISTICAL

INPUTS Material Inventory Inventory OUTPUTS
Natural Efficient
Resources Inbound Process Outward Movement of
Financial Logistics Logistics Logistics Goods &
Resources Services
Time and Place
Human
Utility
Resources System Elements of Trade Logistics
Competitive
Informational Customer Service Material Handling Equipment Advantage in
Resources
Containerization Choice of Transportation Modes Physical
Custom Clearance Shipping Services Distribution
Packing Labelling Marking Port and allied Infrastructure Propriety
Inventory Control Assets
Multimodal Transport
Warehousing & FTWZ Logistics Services
Dry Ports- ICDs/ CFS Logistics Intermediaries

Figure 1.2 : Components Of International Trade Logistics

EVOLUTION & DEVELOPMENT
OF INTERNATIONAL TRADE
LOGISTICS

Traditional Approach of Trade

Logistics

Purchasing Material Production Sales Distribution

Control

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EVOLUTION & DEVELOPMENT OF
INTERNATIONAL TRADE LOGISTICS

Physical Distribution Approach of Firms During

Sixties

Manufacturing Distribution
Material Management
Management Management

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 EVOLUTION & DEVELOPMENT OF
INTERNATIONAL TRADE LOGISTICS

Internally Integrated
Logistics Of Firms During
Eighties

Material Manufacturing Distribution

Management Management Management

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 EVOLUTION & DEVELOPMENT OF
INTERNATIONAL TRADE LOGISTICS

Externally Integrated Logistics

Function During Nineties

Inbound Logistics Process Logistics Outbound Logistics

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 EVOLUTION & DEVELOPMENT OF
INTERNATIONAL TRADE LOGISTICS

International Trade Logistics

Inbound Logistics Process Logistics Outbound Logistics

Reverse
Corrective Action
Logistics

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 INTERNATIONAL TRADE LOGISTICS: BALANCING
DEMAND AND SUPPLY OF PRODUCT AND SERVICES

Forces of Supply Forces of Demand

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 INCREASING ROLE OF INTERNATIONAL TRADE
LOGISTICS AS CENTRAL FUNCTION

Firm With Domestic Motivations – All Firm with International Motivations –

functions Equally important Logistics Function is Central to All Other
Functions

Marketing Financial
Marketing Financial
Management Management
Management Management
International
Trade Logistics

Human Resource Production

Human Resource Production
Management Management
Management Management

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REASONS FOR STUDYING
TRADE LOGISTICS

Right
Time

Right Right
Promotion Price

Seven Rs
of
Internatio
nal Trade
Right Logistics Right
Condition Product

Right
Right
Quantit
Place
y

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 INTERFACES OF MARKETING AND LOGISTICS
FUNCTION IN INTERNATIONAL TRADE LOGISTICS
PRODUCT

Marketing
PROMOTION
PRICE

PLACE

INVENTORY
TRANSPORTATION

LOT QUANTITY
WAREHOUSING

INFORMATION & ORDER

PROCESSING

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IMPORTANC
E OF TRADE
LOGISTICS

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 IMPORTANCE OF TRADE
LOGISTICS TO NATION
Historical

Social

Importance of Trade
Political
Logistics

Environmental

Economic

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HISTORICAL IMPORTANCE OF TRADE
LOGISTICS

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 SOCIAL IMPORTANCE OF TRADE LOGISTICS

 Metro Investment Impact:

 Direct Impact: Travel time savings,
vehicles cost savings, transit option
value, environmental benefits
 Indirect Benefits: Increase in property
values, Land use Changes, Improved
accessed to job & critical facilities,
Benefits to employment wages and
productivity

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POLITICAL IMPORTANCE OF TRADE LOGISTICS
BBIN Agreement on Chabhar Triangle Transit
Transit Route
POLITICAL IMPORTANCE OF LOGISTICS-
CHINA COUNTER STRATEGY
POLITICAL IMPORTANCE OF LOGISTICS:
GWADAR VS CHABAHAR
POLITICAL IMPORTANCE: BIGGER GAME,
LARGER STRATEGY (OBOR)
ECONOMIC IMPORTANCE OF TRADE LOGISTICS
ECONOMIC IMPORTANCE OF TRADE LOGISTICS-
BCIM
ENVIRONMENTAL IMPORTANCE OF TRADE
LOGISTICS
 IMPORTANCE OF TRADE
LOGISTICS FOR THE INDUSTRY
 Generation of Demand
 Reduced Cost of Doing Business
 Tapping International Clientele
 Ensuring Rapid Economic Growth
 Facilitates Bridging Gap between Demand and
Supplies
 Strategic Infrastructure for Global Integration
 Global Outlook Of Indian Industry
 Access To Sophisticated Trade Logistics
Processes and Capabilities
 Ensuring Critical Supplies on Time

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 GROWING RELEVANCE OF
TRADE LOGISTICS
Waves of Economic Liberalization and Globalization in Large Part of the World.

China and India’s Rise as Global Production and Services Base.

Historic Rise in Oil Impacting the Transportation Cost.

Peak in Production Capacity and Efficiency in Certain Areas.

Fundamental Change in Inventory Management Strategies such as JIT/TQM/VMI etc

Proliferation of Product Line Compelling Producers to sell to Fragmented and widely spread Markets as
Quick as Possible.

Real Onset of ICT Era in Latin America, Asia and Africa.

Growing Might of Organized Retails Chain World Wide.

Government Interest in Prompt Logistical Services as it will give additional boost to Economy.

Shift of Power from Developed to Emerging Markets in Asia; Africa and Latin America

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 STORY SO FAR……
Relevance of an efficient transport and trade logistical system

India’s Story for Ensuring Efficient Transport system

High Transaction Cost hampering India’s Foreign Trade

Price reason High Logistics Costs are Poor logistics Infrastructure and outdated management
practices, and lower use of technology.

Logistical advantages and efficient transport system Integrates backward regions mainstream
economy.

Both virtual as well as physical infrastructure are vital for success.

Ability to respond timely is important as it increase productivity and enhance the

competitiveness in exports.

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 Thank You

धनयवाद
Merci

Gracias Danke
Schon

Thank You 谢谢