Future Internet PPP Use Case Project

Future Internet PPP

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Domain Operations

International transport and logistics activities are both relatively simple to understand and complex to execute. Simplicity arises because the operations primarily involve moving and storing goods. What could be more simple?

Complexity arises because of the diversity of goods to be moved and stored, the variations in country infrastructure and logistics maturity, border and customs differences, modal operating variations, differing customer requirements and expectations, differing customs within the various regions of operation, different governmental regulations in the countries through which goods pass, and a host of other operating factors. The figure following provides a stylized view of a “typical” international shipment of some good from one country to another.

Figure: Simplified view of an international goods shipment process

While the process shown in Figure 9 indicates that the international shipment begins with a loading of goods, this is only the beginning of the physical portion of the shipment. Prior to any loading of goods a customer must decide on who will handle their shipment. Once this decision has been made the customer and the logistics service provider must then determine how the goods will be moved from the sourcing location to the destination location. This discussion constitutes the operational network design component of a transport contract. Physical network designs (i.e., the design of plant and distribution locations are done prior to, and separate from, the physical execution activities that are the focus of the current discussion).

Once a decision on how the goods will be transported has been made, the shipper must determine how payment and insurance for the goods will be handled. This involves defining ownership terms, setting up banking relationships and creating trigger points along the supply chain for at which certain financial transactions occur.

With the back office operations almost complete, the goods are readied for transport. However, before the goods can be officially handed over for pickup and transport a host of documents must be produced. These documents include shipping documents that describe the goods to be transported, international customs declaration documents defining what the goods are, who owns them, where they are being shipped, where the goods were manufactured, the value of the goods and other information necessary to clear customs at the source country and to be allowed to enter the destination country. Besides the customs documents, certain tax documents must be filed for delivery to the appropriate authorities so that duties and taxes can properly be handled.

With all documents prepared and distributed to the appropriate handlers for delivery, the goods can be picked up. The LSP must arrange for the pickup and transport of the goods to the port of departure. This may involve contracting with a local trucking company to pick the goods up or using an owned trucking operation to pick the goods up and transport them to the port.

At the port, unless the manufacturer of the goods “stuffed” the goods into an appropriate onwards journey container, the LSP will need to put the goods into a standard international freight container appropriate for the onward journey. Container stuffing is performed at the LSP’s local container freight station and may require the LSP to map the contents of the container for unloading operations at the destination. At a minimum the LSP must generate an inventory list of what is in the container for customs clearance and transport company acceptance for the onward journey. This inventory list is called different things depending on the transport mode (airway bill, bill of lading, etc.).

The loaded container is transported by the LSP to port (air or sea) or picked up by a trucking firm if land based carriage is planned. Paperwork is checked by the contracted onward carrier and, if all is in order, the container is loaded at the port onto the onward transport vehicle.

Upon arrival at the destination port paperwork is transferred to the local authorities and the goods are removed from the vehicle and put into port storage until the paperwork is verified. If all is in order the goods are released and the LSP’s prearranged local pickup contractor picks up the container and moves the goods to a distribution facility. At the distribution facility the goods may be simply placed on another vehicle for full container shipment to a final destination or the container may be opened and the goods integrated with other goods going to different locations. If such a breakdown of goods is performed additional shipping paperwork must be generated so that the items can be tracked to their destination.

Once the goods have been delivered to their final destination a proof of delivery receipt is obtained by the delivery vehicle driver and the physical delivery process is concluded. Of course, follow on paperwork processing continues as bills are received for services rendered, audits performed to determine that the bills were correct and payments made.

The simple process described above indicates that international transport and logistics activities fall into four broad categories (Figure 10). These categories, the physical movement and storage of goods, the trade related clearance and declaration of goods, the financial payment for the movement and purchase of the goods, and the information flows that accompany the entire operation of international goods transport, constitute the broad operational components of the domain.

Figure: Common international transport and logistics activities

Other complexities arise when additional services are performed, intermediate storage is required, or when direct to customer delivery is specified. However, for a simple introduction to the process of international shipment this overview should suffice. In the following sections of the report information on primary stakeholders, the various performance measurement processes, contract processes, payment and ownership transfer categories and other pertinent information necessary to obtain an overview and understanding of the domain is presented. Further information on the terms used in the domain and the topics discussed in the following sections can be obtained by going to the FInest domain dictionary.


Last change: 2011-11-14

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