What is International Logistics? [Full Guide]

International logistics is key to cross-border trade and plays an important role in the management of the global supply chain.

This guide will define what international logistics is and explore its significance, outlining the common challenges faced and key processes involved in international supply chain operations.

Learn more about the importance of efficient international logistics and how working with a 3PL like SEKO Logistics can help optimise your current processes.

Understanding International Logistics

International logistics refers to the management of the flow of goods and services across borders. The goal is to efficiently plan, implement, and oversee the storage and transportation of these goods and services through the international supply chain.

There are many key elements involved in international logistics, including:

Planning and optimising transport routes and methods
Processing import and export documents
Managing customs clearance procedures
Storing and distributing goods
Monitoring shipments
Supply chain procurement

Overall, international logistics plays a vital role in the planning, organisation, optimisation, and control of all the logistics activities required for the exchange of goods and services between countries.

Why is International Logistics Important?

International logistics is important as it makes cross-border trade possible. With economies expanding and the demand for international trade growing, the need for optimised and efficient international logistics processes is becoming more and more essential. And, for many businesses, the ability to trade on a global scale is key to remaining competitive and connecting to new markets.

Having efficient processes in place to allow a business to operate internationally is therefore extremely important. Not only can it be the catalyst for business growth and specialisation, but it can also reduce delivery times, lower costs, and improve customer satisfaction.

Ultimately, effective international logistics is key to improving the shipping and fulfilment of goods and services through an international supply chain.

Key Challenges in International Logistics

Smooth and efficient logistics processes may appear effortless on the surface, but they require a lot of specialist knowledge and skills to overcome common challenges associated with the complexities of international networks.

We have outlined some of the biggest challenges in international logistics below:

Customs and Regulations

Adapting to varied customs procedures and trade regulations across countries can make international logistics complicated. Each country will have their own rules and regulations that will need to be followed, and it can be a challenge to ensure your business abides by these correctly.

As well as this, trade agreements, environmental regulations, and data protection laws are frequently changing, so staying on top of changing regulations is key to effectively managing regulatory challenges. If you don’t, you risk facing delays in your processes, fines, and damaged customer relationships.

Transportation Costs

International logistics is complex, as it involves the movement of goods and services across borders. The long distances that need to be travelled and the different transportation methods required mean that transportation costs can be high. This, as well as the unpredictable and fluctuating nature of transportation costs, can be a challenge for businesses to navigate.

There are many factors that can influence the cost of transportation in international logistics. Key factors include:

Fuel prices
Tariffs
Taxes
Carrier availability
Transportation method
Geopolitical and environmental factors
Quality of infrastructure

Being able to anticipate and react to factors driving up transportation costs and partnering with reliable carriers will help businesses stay on top of constantly changing prices.

Supply Chain Disruptions

There are many unplanned risks to the international supply chain that can result in delays and disruptions. Natural disasters can damage infrastructure and impact transport routes, and political instability, like strikes and conflicts, can halt operations.

A recent example of unexpected disruptions to the supply chain is the COVID-19 pandemic, which saw a range of new regulations put in place to try to reduce the number of goods and people moving across borders. While these measures were put in place to try to mitigate the spread of the virus, they had a huge impact on global trade.

Technology and Infrastructure Issues

Different countries have access to different levels of technological advancements, which can create bottlenecks in the supply chain. For example, some countries might have access to new, state-of-the-art technologies, ports, tracking systems, and digital networks, while others might work with something simpler.

Inadequate transportation infrastructure, outdated facilities, and insufficient capacity for warehousing goods can all impact the flow of goods and efficiency. This is particularly a problem with emerging markets, as they have growing consumer markets but might lack the logistics infrastructure to meet this demand effectively.

Geopolitical Factors

Geopolitical factors can be difficult to navigate in international logistics as they can pose a significant threat to costs and efficiency. For example, trade tensions, political instability, changing regulations, and conflict between countries can all impact supply chain processes.

Despite this, there are a number of strategies companies can implement to try to mitigate the impact of geopolitical factors on their international logistics processes:

Diversifying suppliers: By having a range of suppliers, businesses won’t need to rely solely on one supplier to keep their supply chain flowing. This will minimise the impact if one of their suppliers is impacted by geopolitical events.
Managing inventory: Strategically managing inventory levels can ensure that orders can still be fulfilled, even if there are supply chain disruptions caused by geopolitical factors.
Creating back-up plans: Having comprehensive back-up plans agreed upon and put in place will make sure businesses are prepared in the event of geopolitical changes that might impact their logistics processes.
Being aware of global politics: Making sure to stay aware of geopolitical events and global political trends will allow businesses to anticipate and react to any changes before they become big logistical issues.

How international logistics works: step-by-step

International logistics spans the entire supply chain, from the planning and procurement of goods to last-mile delivery and reverse logistics:

Planning and Procurement

Planning and procurement is a crucial step in the international logistics process as it ensures the right quantity of goods and materials are secured to meet demand in a timely manner. It also sets the foundation for an efficient supply chain. It involves a range of elements, including:

Demand planning: Data is used to predict customer demand across markets, so the right quantity of goods and materials can be ordered to meet this projected demand and protect profits.
Transport planning: Transport methods are decided, carriers are selected, and routes are optimised to be as efficient as possible. Cost, speed, and reliability are all important considerations when planning the transportation of goods.
Procurement of goods and materials: Goods and materials are sourced from suppliers. This will usually involve some research and negotiation to try and get high-quality materials for a good price.

Ultimately, planning and procurement is an early step in the international logistics process that is about more than just the purchasing of goods. It is a way of strategically setting up the remaining supply chain operations to be as efficient and successful as possible.

Transportation and Freight Forwarding

Once orders have been received and goods have been packaged, they are ready for transportation to a distribution centre. This is an important step as it is the main movement of goods across borders and towards the destination country.

Goods can be shipped using a variety of methods, from air freight and sea freight to ground transportation via road or rail. The methods used for shipping will be based on a variety of factors, such as costs, speed, reliability, and sustainability.

The transportation of goods might also include other processes, such as consolidation, which is when a number of smaller orders are combined into one shipment.

With the development of technology and the growth of Internet of Things (IoT) systems, the tracking and monitoring of transportation processes is becoming a bigger consideration. Real-time tracking of systems provides businesses with greater visibility of the location of their goods and timely information about any possible delays or disruptions that can be relayed to other departments to keep them in the loop.

Customs Clearance and Compliance

Customs clearance and compliance is an important part of the transportation process to get right, as it can be complex and non-compliance with customs regulations can result in delays, fines, and penalties.

The movement of goods across borders will need to comply with the following customs requirements of the relevant country:

Import/export laws
Tariffs
Duties
Quotas
Licenses
Certifications
National standards compliance
International standards compliance

Warehousing and Inventory Management

Warehousing and inventory management make sure that goods are stored in a safe place and ready to be shipped. Once goods reach the distribution centre or warehouse, they are stored, and orders are picked, packed, and shipped out to customers as per demand.

Important considerations about warehousing and inventory management include:

Stock monitoring: The monitoring of stock helps a business understand what stock is being stored, how much stock is being stored, and where it is located in the warehouse or distribution centre. This is a useful way of predicting the amount of goods that will need to be stored to meet customer demand and controlling the flow of goods into and out of the storage facility.
Warehouse placement: Strategically placing warehouses and distribution centres across different countries is important for reducing lead times and getting goods to customers quicker and more efficiently. For example, a business in the US might want to have access to a warehouse in Europe to make it easier and quicker to ship products to European customers.
IT systems and technology: Utilising up-to-date, state-of-the-art technologies can help businesses get end-to-end supply chain visibility and allow them to track shipments, monitor inventory levels, and record financial transactions accurately. This can reduce costs, including inventory holding costs, and help with efforts to maximise supply chain processes.

Delivery and Last-Mile Logistics

From the warehouse and distribution centre, goods are picked, packed, and shipped out to customers. Home delivery and last-mile delivery helps make sure goods reach customers safely and quickly.

Having efficient delivery and last-mile logistics processes in place is important in meeting demand quickly and keeping customers happy and satisfied. During this stage, customers expect real-time tracking of their parcel, clear communication of any issues that might arise, and orders arriving in the time frame that was predicted.

Reverse Logistics

International logistics can optionally include reverse logistics, which involves ecommerce returns and the reuse or disposal of unwanted products or materials.

Learn more about the reverse logistics process with our guide.

How SEKO Logistics simplifies international logistics

Working with a third-party logistics (3PL) partner like SEKO Logistics can help you optimise international logistics processes and ensure they run smoothly.

At SEKO, we have decades of experience in the management of global fulfilment processes across a range of industries. Our expert team is dedicated to working closely with you to deliver bespoke solutions tailored to your business.

As experts in end-to-end logistics, we can help you with everything from international cross-border shipping and customs clearance to home delivery and last-mile. And, with our MySEKO technology, you can benefit from our specialist technology systems that have been designed to have everything you need to effectively manage a global supply chain.

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