International Logistics – A brief introduction

Supply Chains ride on Logistics Networks and IT Applications/Internet. In this topic a brief introduction to each of the Logistics Function/Industry is attempted.

The foundation of logistics function is based mainly on Transportation by Road, Rail, and Air & Sea.

Maritime trade has existed since times immemorial. History is replete with the major maritime routes that connected continents across the globe and enabled trade between them. Harbors and waterways have flourished in strategic locations in all countries attracting trade and commerce.

Global trade is dependant 80% on sea route than air route, simply for the fact that air route is far more expensive and is used only in case of light weight cargo, perishable cargo, and priority shipments or in other conditions where shipping would not be possible.

Shipping trade is characterized by shipping companies who own vessels and specialize in the transportation of certain types of cargo like General Cargo, Containerized cargo, bulk commodities carriers, oil tankers, gas tankers, OD cargo carriers, etc. Normally the so called mother vessels ply on the main shipping route across the continents traveling through Pacific or Atlantic oceans and calling on countries from point to point.

Mother vessels are bigger vessels with higher cargo carrying capacity. Some of the main routes normally traversed by mother vessels are the Far East to Europe and Mediterranean, Europe to America East Coast and the Gulf of Mexico, Far East Australia to South Africa, Intra Asia, Asia to the Middle East, and Europe to South Africa, etc. The schedules in detail are announced in advance for each of the vessels. The feeder vessels carry cargo from individual ports in nearby countries which discharge the cargo at the port of calling to be transshipped on to the main vessel.

Thus for example, a cargo originating in India bound for South Africa may follow the route where cargo reaches one of the ports in Ceylon or Dubai even Singapore in some cases and travels right up to Europe where in is further transshipped on another vessel bound to South Africa. Like wise the global shipping trade lanes have certain gateways and lanes which they operate and in turn are fed and supported by feeder lanes and vessels.

Shipping liner announces schedules of the vessels a few months in advance. Freight forwarding agents book space on the vessels either based on estimates or based on their pipeline orders. Depending upon the volume that the forwarder is able to give and patronize shipping lines, they get to bargain and negotiate for better rates. In general cargo, the shipments are made in FCL Containers.

FCL stands for Full Container Load. FCLs come in two sizes called 20 feet and 40 feet containers which refers to the length of the container. Each container has fixed dimension and weight carrying capacity. FCL Containers are provided by shipping lines to the freight forwarders who stuff the cargo and get the cargo sealed after customs inspection which is then picked up and loaded on the ship at the port.

Some of the major international shipping lines dominated world shipping trade is P&A, Nedlloyd, Maersk, Hapag Lloyd, American President Lines, Evergreen, NYK, HanJin, Cosco, CSCL etc.