Innovation in transportation and logistics is the service provided by United Parcel Services (UPS), Federal Express (FedEx) and similar companies. In addition to providing air express service for packages these companies are offering complete logistics management services including support services for their clients – truly door to door delivery around the world. For example, FedEx will take a manufacturer’s product warehouse it, keep inventory, provide all the labor and technology and move it throughout the World. FedEx can warehouse a computer system made in Malaysia move it to Japan to be coupled with components from Taiwan and then deliver completed product to the final destination in yet another country. One client’s experience illustrates how such a service can improve a company’s distribution costs and service. The computer parts repair center of this company moved into a FedEx Express Distribution Center in Japan and was able to cut average total turnaround time from 45 days to 5 days while lowering cost. FedEx took over storage, control and shipment of parts using its own networks and aircraft UPS offers similar services including local parts stocking and defective return services in Europe the Pacific Rim, and the Americans.
Distribution and its cost are an important part of every international transaction. Cheap labor may take Chinese clothing competitive in the United States but if delays in shipment tie up working capital and cause winter coats to arrive in April, the advantage may be lost. Similarly production machinery disabled for lack of a part can affect cost throughout the system, all of which might be avoided with a viable logistics system.
The globalization of marketing and manufacturing in which component parts are made in several countries, assembled in some others and serviced the world over, puts tremendous pressure on a company’s ability to physically move goods. A narrow solution to physical movement of goods is the selection of transportation; a broader application is the concept of logistics management or physical distribution. When customers value broad product assortment, holding a great number of products or component parts in inventory increases the costs of these supplier. Although the need for warehousing can be reduced with direct deliveries from manufacturers the value of direct deliveries is diminished when orders are received in several shipments and at different times. One solution to this problem is merge in transit a distribution methods in which goods shipped from several supply locations are consolidated into one final customers delivery point while they are in transit and then shipped as a unit to the customers. As distribution systems becomes more complex and costly merge in transit is one system deigned to increase customer value and decrease distributions costs.
Foreign Freight Forwarder
The foreign freight forwarder, licensed by the Federal maritime Commission, arranges for the shipment of goods as the agent for an exporter. The forwarder is an indispensable agent for exporting firms that cannot afford in house specialist to handle paperwork and other export trade mechanics.
Even in large companies with active export departments capable if handling documentation a forwarder is useful as a shipment coordinator at the port of export or at the destination port. Besides arranging for complete shipping documentation the full service foreign freight forwarder provides information and advice on routing a scheduling routes and related charges consular and licensing requirements labeling requirements and export restrictions. Further, the agent offers shipping insurance, warehouse storage packing and containerization and ocean cargo or air freight space.
Astute freight forwarders will also double check all assumptions made on the export declaration such as commodity classifications, and will check the list of denied parties and end uses. Both large and small shippers find freight forwarders wide range of services useful and well worth the fees normally charged. In fact for many shipments forwarders can save on freight charges because they can consolidated shipments into larger, more economical quantities, although many forwarders are available, more and more companies are using those that have joined alliances with shippers and become part of the larger multifaceted integrators discussed earlier experienced exporters regard the foreign freight forwarder as an important addition to in house specialists.