Logistics Theory and Notes

1. INTERNATIONAL LOGISTICS MANAGEMENT
GROUP WORK
LECTURER NAME: DR SHUHAIMI
COURSE CODE: BIB3044

2. • Export Management
Export management is the use of managerial process to the serviceable area of exports. It is basically
associated with export activities and type of management that brings harmonization and incorporation
of an export business.
• What is Export Logistics?
Logistics for export, represents the entire supply chain channel which includes streamlining of order
handling, transportation, inventory management and handling, storage, packaging, and clearing of the
export goods. Efficient management of logistics by any export firm can give them a competitive
advantage through better order handling and improved cash flows.
• Regulations and taxes
One of the main is the export tariff and taxes. Malaysia customs apply a tariff on exported goods
between 0 to 10 percent, following ad valorem rates. Under Malaysia’s Customs Act, 1976, tariffs paid
on exported goods which were originally sourced from imports are eligible for a 90 percent refund.

3. EXPORT LOGISTICS DOCUMENTATION
The activities involved in the logistics process naturally have a flow of documentation:
 Commercial invoice
 Dock receipt
 Bill of lading
 Certificate of origin
 Warehouse receipt
 Inspection certificate
 Export license
 Packing list
 Health certificate
 Insurance certificate
 Consular documents
 Free trade document
 Shipper’s letter of instruction
 Destination Control statement
Responsibility for this ownership of documentations, payments and transfer of ownership of the goods are dictated by the
latest incoterms 2020 series.

4. TEN STEPS TO SUCCESSFUL EXPORTING
1. Decide where to sell
Identify the markets with a little desk research. Look up the demographics, cultural and religious practices and your
potential competition.
2. Have a plan
This should include your People, Capacity, Packaging and Knowledge
3. Choose a route to market
You can do one of four options:
• Sell directly
• Use a distributor
• Use a sales agent
• Create a joint venture
4. Find the opportunities
Trade fairs are one of the best ways to find opportunities both in the UK and abroad. Meet buyers and generate new
business.
5. Start marketing
Adverts can help you gain exposure but can be expensive. Global social media sites such as Linkedin, Facebook and
Twitter can also help you to promote your message quickly and free of charge. Although these do not cost anything
to set up, they need time invested to keep updated.

5. 6. Understand the admin
Documentation is at the very heart of exporting, without it there is no contract, no transport and no
payment. The requirements vary from country to country.
7. Get paid and get insured
Once the orders start to come in, you need to be paid. We can help make sure you do that with
Incoterms. This includes Export documentation and Written quotations.
8. Legal considerations
Understanding the legal and regulatory environment in all countries to which you would like to export
is vital. We can help get your paperwork in place and put you in touch with international lawyers
should it be required.
9. Transport logistics
Now you’ve made the sale and agreed the terms, you have to get the goods there! We can help make
sense of transportation. From your Incoterms insurance, duties and customs clearance, to the packaging
you require and the method(s) of transport or freight forwarders required.
10. Success!
Congratulations. Now you have successfully become an international exporter. Now you need to
increase your chances of repeat business and become a reliable international exporter with a solid
brand.

6. EXPORT LOGISTICS PROCESS
• Once the product has been cleared for dispatch from the factory or the warehouse facility, the
logistics process formally starts. One of the first things exporters need to do is to decide the mode
of shipping and zero-in on an ocean freight forwarder, who is responsible for arranging and
managing the transport of goods from point A to point B.
• A freight forwarder maintains working relationships with several vessel operators and even non-
vessel operating carriers to secure great deals for the shipper.
• The next step is to arrange for a customs clearance agent for shipping, who is responsible for
ensuring all laws and compliances with respect to export processes and the custom clearance
requirements are adhered to till the goods reach the final point of destination. In some
transactions, there may be 2 customer clearance agents to handle local laws more effectively.
• Another aspect to consider is the container shipping method. For example, if one is shipping by
sea/ocean freight export, and the quantum of goods being shipped is not enough to fill a full
container load (also called FCL), then the shipper or exporter may have to arrange for less than
container load shipments.
• The goods to be shipped must be packed in an ‘export-ready’ manner, which includes the
necessary marking and labelling of the cases, packages, or cartons. An export packing list
document is required if more than one package is to be dispatched in the lot. The goods are then
cleared from the exporter’s premises, after completing excise formalities (if any).

7. EXPORT LOGISTICS
PROCESS (cont.)
When it comes to sending the export
products to the destination, various
parties are involved in the process. Apart
from the exporter, there is the buyer, the
banks on either side of the transaction,
the insurance company, export freight
forwarding, customs house agents, C&F
agents, the customs department, port
authorities, transit transport providers,
and the shipping company.

8. WHAT ARE INCOTERMS?
 To facilitate commerce around the world, the International Chamber of Commerce
(ICC) publishes a set of Incoterms, officially known as international commercial terms. Globally
recognized, Incoterms prevent confusion in foreign trade contracts by clarifying the obligations of
buyers and sellers.
 Types of INCOTERMS:
• FOB (Free on Board). Under the terms of FOB, the seller clears the goods for export and ensures
they are delivered to and loaded onto the vessel for transport at the named port of departure. The
buyer takes over risk and costs, including import clearance and duties, as soon as the goods are
loaded onto the transport vessel at the port of departure. FOB only applies to ocean or inland
waterway transport.
• CIF (Cost, Insurance and Freight). Under CIF, the seller delivers the goods, cleared for export,
onboard the vessel at the port of shipment, pays for the transport of the goods to the port of
destination, and also obtains and pays for minimum insurance coverage on the goods through
their journey to the named port of destination. The buyer assumes all risk once the goods are on
board the vessel for the main carriage; however, they don’t take on any costs until the freight
arrives at the named port of destination. CIF applies to ocean or inland waterway transport only.
• FCA (Free Carrier). Under the shipping terms for the FCA Incoterms (short for “Free Carrier”),
the seller is responsible for export clearance and delivery of goods to the carrier at the named
place of delivery. Unless otherwise agreed upon, the seller is only responsible for loading the
goods if the seller’s place of business is the named place of delivery. A carrier is any person or
company who undertakes the carriage, such as a shipping line, airline, trucking company, railway
or freight forwarder.

9. SUMMARY OF EXPORTING GLOVES FROM MALAYSIA
• For the summary of our presentation, the product that we chose to export is glove. Gloves are produces from
synthetic rubber which is used by various industry such as medical industry, food industry and chemical
industry. Our initial export strategy is market subsidiary. However, it is not suitable therefore we would like to
change it to Export Management Company due to the language difficulty and also the distribution channel to
the market. EMC will help our company to approach and deal with the buyer.
• The incoterm that is involved in exporting glove is Free Carrier (FCA). FCA is a trade term that require seller
to deliver cargo or goods to place where carriers operate such as airport, port and other places. FCA is one of
the incoterms that are designed for containerized cargo and suitable for the shipment of containers. This
incoterm can be use for shipments of either full-container loads (FCL) or less-than-container loads (LCL).
Besides that, FCA is growing to become of the most popular incoterms as it is specially created for goods
shipped through multimodal transportation due to increase numbers of multimodal shipments. There are few
reasons that we should use FCA. Based on FCA terms, we will only have to do custom clearance for exporting.
Every country has different custom clearance requirement or procedure, it will be troublesome for our
company to identify the import country requirements. Therefore, implementing FCA allow our company to let
Export Management Company (EMC) to handle these import formalities. Under FCA terms, EMC should be
responsible to select the carrier that transport goods from our organization, this would allow us to focus on
core activities without wasting time selecting carrier. We would be responsible to package the goods for export
and deliver the goods to the buyer named place of delivery. If no specific location has been agreed within the
named place, and if there are several points available, the exporter may select the point at the place of delivery
which best suits his purpose. However ,if the named place is within the exporter’s premises, then the seller is
responsible to load the goods onto the carrier’s truck.