3/27/2018

Global Logistics

Nyoman Pujawan
ITS

Objectives of international supply chain

• Lower costs
• Gain market access
• Pre-emption of competition
• Seeking strategic assets e.g. technology,
capable suppliers, etc.
• Rationalization to increase efficiency

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Government Interest
Government interest related to International
trade:
• Promoting their own economy
• National defense

In general, each country wants to increase

export and reduce imports. Logistics systems
must de designed to take them into account.

Government Interest: Defense

• Export control on strategic materials (USA:
Stringent controls on the export of materials
related to nuclear energy)
– Commodity control list (CCL)  to enable the
government to control movements of strategic goods
(may only apply to certain destinations).

• Import control  both tariff duty and non-tariff

barrier. Example of non-tariff: quota, prohibit
import of used cars (older than 4 years), local
content requirements.

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Government Support for Its International Carriers

• “40/40/20 split”  used in a bilateral

agreements between country A and B where 40%
of liner traffic between nations A and B are
moved by vessel of nation A, 40% by vessel of
nation B, and 20% moves on vessel from any
other nation.

• Cabotage  each nation reserves for its own

carriers the exclusive rights to carry domestic
traffice (this is not normally for international
trade).

How to Enter a Foreign Market

The foreign
Could include firm buys or
Simply export licensing, builds a
the product francising, or Joint venture subsidiary in
from a home long-term sales with a firm in a the foreign
country contract host country market

Wholly owned
Export Contract Joint Venture
subsidiary

Little cargo moving

A lot of cargo internationally,
moving mostly for shipping
internationally supplies between
subsidiaries

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Global Sourcing
• Sourcing  obtaining materials or supplies
(could be goods or services) from vendors

• Global sourcing  vendors involved are

located in different countries

• Parts / components sourced internationally

accounted for about 1/3 of the total trade.

Terms of Sale and INCOTERMS

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INCOTERMS
• The Incoterms® rules are an internationally
recognized standard and are used worldwide
in international and domestic contracts for the
sale of goods. First published in 1936,
Incoterms® rules provide internationally
accepted definitions and rules of
interpretation for most common commercial
terms.

Incoterms®

• International Commercial Terms (Incoterms)

• Formulated by the ICC (International Chamber of Commerce)
• A set of standardized guidelines that parties in different
countries (and different legal environments) use for
structuring the logistical elements of selling and buying goods.
• The emphasis is on delineating (in a sales transaction of
tangible goods) the risks and costs between the seller and the
buyer via determining a specific place and time for delivery of
the goods.

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Incoterms 2000
E F C D
Departure Main carriage Main carriage paid Arrival
unpaid
EXW FCA CFR DAF
Ex Works Free carrier Cost and Freight Delivered at Frontier

FAS CIF DES

Free Alongside Ship Cost, Insurence and Delivered Ex Ship
Freight
FOB DEQ
Free on Board CPT Delivered Ex Quay
Carriage paid To
DDU
CIP Delivery Duty
Carriage and Unpaid
Insurance Paid to
DDP
Delivered Duty Paid

EXW
Ex Works …(named place)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Buyer’s Risks
Risks

Seller’s Buyer’s Cost

Cost

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FCA
Free Carrier…(named place)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s Cost

FAS
Free Alongside…(named place)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s Cost

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FOB
Free On Board…(named port of shipment)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s Cost

Incoterms 2010 Chart

Any Mode Terms Control of Main Carriage Risk of
Costs Cost Costs

Departure, Freight Collect

EXW (Ex-Works) Buyer Buyer Buyer

Main Carriage Freight Collect

FCA (Free Carrier) Buyer Buyer Buyer

Main Carriage Freight Prepaid

CIP (Carriage & Insurance Paid To) Seller Seller Buyer

CPT (Carriage Paid To) Seller Seller Buyer

Arrival, Freight Prepaid

DAT (Delivered at Terminal) Seller Seller Seller

DAP (Delivered at Place) Seller Seller Seller
DDP (Delivered Duty Paid) Seller Seller Seller

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Incoterms 2010 Chart

Sea, Inland Waterway Control of Main Carriage Risk of

Transport Terms Costs Cost Costs
Main Carriage Freight Collect

FAS (Free Alongside Ship) Buyer Buyer Buyer

FOB (Free on Board) Buyer Buyer Buyer
Main Carriage Freight Prepaid

CFR (Cost and Freight) Seller Seller Buyer

CIF (Cost, Insurance, and Freight) Seller Seller Buyer

ASEAN Context

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http://www.slideshare.net/OECDpsd/towards-the-aec-2015-and-beyond

AEC
The AEC areas of cooperation include:
• Human resources development and capacity building;
• Recognition of professional qualifications;
• Closer consultation on macroeconomic and financial policies;
• Trade financing measures;
• Enhanced infrastructure and communications connectivity;
• Development of electronic transactions through e-ASEAN;
• Integrating industries across the region to promote regional
sourcing;
• Enhancing private sector involvement for the building of the AEC.
In short, the AEC will transform ASEAN into a region with free
movement of goods, services, investment, skilled labour, and
free flow of capital.

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Trade of ASEAN Countries with selected

partners

37% of trade is
with China,
Japan, Korea

31% among
ASEAN

Physical Connectivity

Maritime
Transport
• Enhance the
performance and
capacity of the 47
designated ports

• Develop an ASEAN
Single Shipping
Market

Source: ASEAN Maritime Transport Development Study, ALMEC Corp. 2002.

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SE Asia Ports Play important roles in world

economy
Involving about 103 large ports all over the world (75% of total). In terms
of TEUs, the total is about 651,000,000 in 2013 for the whole world.
Proportion of TEUs Growth (2009 -
Region (%) 2013), %
Australia 1 112
SE Asia 14 132
East Asia 32 147
Middle East 6 127
Meditteranian 4 135
North Europe 8 127
Africa 1 139
Latin America 3 135
North America 6 119
Total 75 138% (Average)

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