Why is International Logistics Important?

Explore the international logistics process, its importance, and how it can help your business expand into global markets.

The international e-commerce market is aggressively competitive. Almost 60% of businesses already have a cross-border international presence. So, how does a merchant expand their business into global markets with a competitive edge?

International Logistics

What is international logistics?

As with every other business aspect, you need international logistics strategies. Shipping orders globally is not only complex but also costly and time-consuming. However, merchants can easily cross the global markets’ threshold with a solid logistics and fulfillment infrastructure. With cross-border purchases making up the 20% share of all worldwide e-commerce by 2022, tapping into the international customer base is an excellent opportunity. 

The international logistics process involves the shipping and fulfillment of finished goods through a global supply chain network. Furthermore, it consists of international transportation and distribution for efficiently delivering goods to end-users across the globe. 

International Logistics

What does international logistics involve?

Establishing an international e-commerce supply chain brings several complexities, particularly for direct-to-customers (DTC) brands. It’s never been easier for DTC brands to get into the international market. When building a global brand, you need more than just a varying range of products to sell overseas, additional costs of international shipping, and inbound and outbound logistics.

Here’s an overview of all aspects that international logistics involves:

Handling of goods

It’s crucial to evaluate your current physical distribution of goods if you want to expand your business operations into the international market. For instance, you will have to calculate how much it will cost you to ship an international order overseas if you’re storing inventory and shipping orders from a single warehouse in your local region.
There are several options available to tackle the situation. You can ship international orders from your home country. However, you might want to move to a warehousing location that can reduce shipping costs to reach the border before it gets sent overseas.

Furthermore, you can store some inventory in a fulfillment center within a country from where you are receiving maximum orders. Eventually, you can have orders picked, packed, and shipped from the fulfillment center. It also reduces several common customs and tariff issues since inventory is stored within a country and can be shipped domestically. 

Mode of transportation

You have plenty of modes of transportation available, depending on your budget and delivery timelines — air, sea, or ground shipping, and parcel or freight shipping. You can make the right decision only if you carefully evaluate the cost, time, and reliability of each mode of transportation.
Furthermore, it would help if you determined which one’s the best for your margins. Most transportation modes involve delivering an order to an international destination, mainly when dealing with cross-border shipping.

The process of goods transportation

Merchants send goods to freight forwarders, who then liaise with multiple carriers to find the ideal shipping option. The goods are then transported via different modes of transportation to the end consumers. At the destination, the goods are unloaded and transported to the customer’s address after clearing customs.
The transportation process for international orders is quite complicated, with varying delivery times. Delivery times are often slow, depending on where you are shipping to. Furthermore, different governing bodies are involved since the orders are shipped from one country to another.
You should double-check your shipping documentation, and that the goods you’re shipping meet the country’s trade rules and regulations for the smooth completion of the transportation process. Lastly, it’s crucial to estimate last-mile delivery times and inform your customers of order updates.

Customs and import duties

When shipping goods internationally, you will have to deal with additional costs, including customs and import duties. These duties vary from country to country and depend highly on the value of the imported goods. Furthermore, clearing customs of a country requires significant paperwork.
Furthermore, it’s your responsibility as the shipper to inform your customers about additional fees. If your customers are not aware of the additional costs, they may never claim the order, and you shall be liable for goods that get held up at customs.

Advantages of international logistics for e-commerce stores

Establishing an international e-commerce supply chain brings several complexities, particularly for direct-to-customers (DTC) brands. It’s never been easier for DTC brands to get into the international market. When building a global brand, you need more than just a varying range of products to sell overseas, additional costs of international shipping, and inbound and outbound logistics.

Here’s an overview of all aspects that international logistics involves:

Competitive pricing

Maintaining smooth international logistical functions is your key to staying competitive. E-commerce businesses have relied on global logistics for several years since manufacturing goods cost less, even though they have to pay an additional transportation cost. Businesses with the cheapest supplies available in enormous volumes dominate the market. Eventually, low-cost bearing allows companies to offer special deals and discounts to customers.

Wider product ranges

A global supply chain can help businesses bring in more products to customers. Furthermore, e-commerce businesses can explore multiple niches with effective international logistics processes.

Reach new customers

International logistics is not only about a particular supply chain. Selling your products globally allows you to tap into a completely new market segment. However, you’ll need to conduct proper research before going global. Furthermore, you’ll also need to figure out the most effective shipping strategies – whether you ship international orders from your warehouse, or invest in an overseas warehouse in your new market.

Customs and import duties

When shipping goods internationally, you will have to deal with additional costs, including customs and import duties. These duties vary from country to country and depend highly on the value of the imported goods. Furthermore, clearing customs of a country requires significant paperwork.
Furthermore, it’s your responsibility as the shipper to inform your customers about additional fees. If your customers are not aware of the additional costs, they may never claim the order, and you shall be liable for goods that get held up at customs.

Challenges of international logistics for e-commerce stores

Impact of global events

A global supply chain will have consequences resulting from international events. Global events can impact your fulfillment process. Furthermore, the COVID-19 pandemic proved that closing a factory in one region could affect e-commerce businesses overnight.
Evaluating risk factors in your supply chain is a good start, but unexpected global events can still affect your logistics processes. However, if you diversify your global supply chain into multiple countries, you can protect your business from global upheavals.

Counterfeiting and theft of goods

Counterfeiting is quite prevalent, and customer confidence is low, hampering a business’s ability to sell its products. Apart from fake goods entering the supply chain, goods pass through multiple hands in transit, often increasing the possibilities of theft.

Furthermore, it’s pretty tricky for businesses to figure out when the theft might have occurred. The fact that they receive information about the shipment of their goods only days after they have already arrived at their end destination makes it worse.

Time-consuming

International logistics functions can prove challenging for e-commerce businesses if not managed properly. Moreover, every aspect of a global supply chain takes up a lot of time and effort, from tracking the flow of goods to calculating international shipping costs and transit times.

Late shipments

Shipping orders far from your home country not only increase transit times, but customs can also cause delivery delays. Customers expect fast, affordable, and reliable shipment and delivery irrespective of their location. Furthermore, high-demand products come with high competition.
However, there are several ways of reducing delays in cross-border shipment delays. If you store inventory within the country you’re shipping to, it can significantly reduce transit times, save shipping costs, and have fewer instances of goods getting held up at customs. Moreover, it allows you to easily meet customer expectations.

International customs and taxes

Each product has a tariff code for custom compliance. When you ship goods internationally, you must ensure the proper codes are assigned to all SKUs (stock keeping units). Furthermore, all taxes and other costs must be calculated accurately.
If you don’t manage international customs and taxes carefully, you can face legal actions, severe losses, and costly delays. Double-checking all your documentation is the primary requirement.

Poor returns management

Returns of orders form an inevitable part of global logistics processes. However, handling returns is quite tricky, particularly with international orders. Poor returns management frustrates customers, and reduces profitability, considering reverse international logistics costs.

International Logistics

Tips for perfecting international logistics

If you succeed in optimizing your international logistics functions, you can save a significant amount of money and make shipping globally worth the investment. Here’s how you can do it:

  • It’s essential to check how your products are classified. Though there’s no standard classification system, several countries use different coding systems to distinguish between different products. Furthermore, you should ensure whether the goods you are going to sell are allowed to cross and enter foreign borders, since many countries restrict the import of certain products.
  • Packaging is always important regardless of the location you are shipping to. Packaging varies with your product, its size, and weight. Thus, entering weight and dimensions helps ensure the accuracy of the amount charged. Furthermore, you’ll also need to ensure the safety of the fragile products you’ll be shipping.
  • Your website must be up to date with any and all additional information, including international shipping policies if you plan to ship to new countries.
  • You must let your customers know when they can expect their orders. It can be done quickly with an order-tracking software that enables customers to track orders in real-time. 
  • Lastly, you can invest in an international logistics partner. They can take all the heavy, time-consuming aspects of global logistics strategy off your shoulders. 
International Logistics

Reach international customers

A well-known international logistics solutions company allows e-commerce businesses to reach all customers wherever they are across the globe. It’s the primary benefit of commissioning a global logistics solutions partner. Furthermore, international logistics companies have relations with international freight specialists, allowing e-commerce businesses access to more carrier options and shipping destinations than ever before.

What are the benefits of international logistics?

Here are some other benefits international logistics bring in for e-commerce stores:

  • You can create and increase the value of your e-commerce business as you make your business available to a broader customer base.
  • It helps you reduce costs by outsourcing transportation and warehousing, offering faster shipment and delivery of products.
  • An effective international logistics process ensures timely delivery of your goods with safe shipping options.
  • You can build a positive brand image and understand customer needs, leading to satisfied customers worldwide.
International Logistics

How does shipping internationally work?

Expanding your e-commerce business beyond geographical borders seems challenging and impossible to achieve. However, we have compiled a list to help you understand how international shipping works and where you should start.

  • Get to know the international demand for products you are planning on selling and how your target countries regulate it and its import.
  • You should use a parcel consolidator to control your shipping costs.
  • With shipping automation software, you can create a more predictable international buying and fulfillment experience for your customers.
  • Furthermore, use shipping software and the rate shopping feature to estimate shipping costs more accurately and control total delivery costs.
  • Deliver packages Delivered Duty Paid (DDP) instead of Delivered Duty Unpaid (DDU) by precisely calculating the total shipment costs, including taxes, duties, and fees.
  • Lastly, you should find an online shipping automation software offering Electronic Trade Documentation and paperless invoices.
International Logistics

What is international logistics management?

International logistics management plays a significant role in transportation, responsible for planning, implementing, and controlling information and physical goods from one point to another.  

Effective international logistics management aims to improve business operations, increase productivity, and assure customer satisfaction. Furthermore, using the best global logistical functions can deliver a competitive edge to your e-commerce business. 

Since the supply chain network always keeps changing, you must revise the international logistics management regularly. If you follow these guidelines, you can ensure that your supply chain network is as efficient as possible.

Conclusion

Packaging is the most critical aspect of international shipping. Selling goods globally comes with a few challenges. However, most supply chain leaders overlook optimized packaging. Getting the packaging of your goods right is critically essential in exporting your goods. 

Standardized packaging helps you cut costs and prevents your goods from getting damaged or rejected at the port of entry. Furthermore, when shipping goods globally, you might want to protect your products against spills, rough handling, and unauthorized entry. Lastly, suitable packaging also reduces the risk of loss during transportation. Making the right first impression with your business partners starts with delivering the goods promised and not with compromised packaging.

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FAQs

The five major elements of international logistics include:

  • Storage, warehousing, and materials handling
  • Packaging
  • Inventory
  • Transportation
  • Information and control

The international logistics process involves planning and managing the flow of goods in your company’s supply chain network. The effective management of international logistics functions can help you improve the customer service level by developing a warehousing system, quick and cost-effective transportation, and maintaining an optimum inventory level.

The primary objective of an international logistics strategy is to deliver your products to your customers at the promised time and the least possible cost.

  1. What are the different types of international shipping services?

  • Air freight service
  • Rail freight service
  • Road freight service
  • Ocean freight service
  • Importer and exporter
  • Freight forwarders
  • Custom House Agent (CHA)
  • Shipping company
  • Customs
  • Transport providers

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