Difference between domestic and international logistics

Difference between domestic and international Logistics-LM Blog-06

The difference between domestic and international Logistics arises due to the following three reasons – Logistics costs are very large part of the cost of goods in international trade, international trade methods are different from domestic trade methods; And political, 
Cultural and institutional elements have an important place in international logistics, whereas they do not have much influence in domestic logistics. Domestic logistics operate within the border of a country whereas international logistics operates globally. International logistics differs from domestic logistics in the following ways –
1. Logistics Cost- According to the data published by Logistics Cost-UNCTAD, the sea freight paid by developing countries was 8.89 percent of total imports in the year 1988 as compared to 4.40 percent in developed countries. Thus, the transportation expenditure paid by developing countries is more than double that of developed countries. The study shows that in developing countries, transportation costs pose more obstacles in the way of foreign trade than taxes. But the above-mentioned percentage average is based on all objects and distances and there is a lot of difference hidden.
Sea freight may account for at least 1 percent of the cost of the final product (in the case of pharmaceutical goods) and up to 80 percent in the case of goods such as raw granite stone. In general, the manufacturing process of a commodity depends on value addition. But sea freight also includes domestic transportation costs on both sides and other logistic costs.
Often stock-related costs are assessed. The cost of holding a stock at the current interest rate may be 30 percent of the value of the item. Likewise, there are low but natural and often overlooked costs that arise from non-physical maintenance.
Such as logistics costing computers, demand forecasting costs, firm shipment plans, receiving various orders and sending goods and making necessary documentation.

 

2. Mechanics – The second difference between domestic and international logistics is in mechanics. Doing business in a rival country for the first time is discouraging. It depends on a lot of experience and specialties. It is difficult to quote the price without knowing the procedures and regulations of the country concerned.

In addition, the situation of trade in two countries compared to domestic trade The exchange of documents requires a lot of documents. According to a study, it takes 48 hours to type a document for export in India, requires signatures from 327 different authorities and takes an average of 6 weeks to complete.

In addition, the time taken by shipping cargo etc. is equal to 21 days, which is called the time produced. The time taken for the actual transportation of the goods was 40 percent less than it.

When developing countries are engaged in foreign trade transactions as buyers and sellers, the delay at the switching point is thus a greater part of the total transit time, thereby increasing the cost of logistics. This shows that for those developing countries engaged in international trade, logistics can be an important element in terms of cost competitiveness and profitability.

 

3. Political and cultural Environment – The last element group is political and cultural environment. Control of delivery is necessary to receive orders repeatedly.

In other country, all these elements of capital and labor capacity and productivity are necessary for international trade transactions and can be classified as unknown.




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