Chapter One Introduction 1
1-1 International Trade Growth 3
1-2 International Trade Milestones 4
1-2a The Bretton-Woods Conference 4
1-2b The World Trade Organization 4
1-2c The Treaty of Rome 4
1-2d The Creation of the Euro 4
1-3 Largest Exporting and Importing Countries 5
1-4 International Trade Drivers 5
1-4a Cost Drivers 5
1-4b Competitive Drivers 7
1-4c Market Drivers 8
1-4d Technology Drivers 9
1-5 International Trade Theories 9
1-5a Smith's Theory of Absolute Advantage 9
1-5b Ricardo's Theory of Comparative Advantage 10
1-5c Heckscher-Ohlin Factor Endowment Theory 10
1-5d International Product Life Cycle 11
1-5e Porter's Cluster Theory 11
1-6 The International Business Environment 12
Key Terms 13
Review and Discussion Questions 13
Endnotes 13
Chapter Two International Supply Chain Management 15
2-1 Historical Development of International Logistics 16
2-1a The Early,“Slow”Days 16
2-1b The Move Toward Speed 17
2-1c The Emphasis on Customer Satisfaction 18
2-2 Definitions of Logistics and Supply Chain Management 19
2-2a Logistics 20
2-2b Supply Chain Management 20
2-3 Definition of International Logistics 22
2-4 Definition of International Supply Chain Management 22
2-5 Elements of International Logistics 23
2-6 The Economic Importance of Logistics 24
2-7 The Economic Importance of International Logistics 25
Key Terms 26
Review and Discussion Questions 26
Endnotes 26
Chapter Three International Logistics Infrastructure 29
3-1 Definitions 30
3-2 Transportation Infrastructure 30
3-2a Port Infrastructure 31
3-2b Canals and Waterways Infrastructure 36
3-2c Airport Infrastructure 38
3-2d Rail Infrastructure 40
3-2e Road Infrastructure 42
3-2f Warehousing Infrastructure 46
3-3 Communication Infrastructure 46
3-3a Mail Services 46
3-3b Telecommunications Services 47
3-4 Utilities Infrastructure 49
3-4a Electricity 49
3-4b Water and Sewer 50
3-4c Energy Pipelines 50
Key Terms 51
Review and Discussion Questions 51
Endnotes 51
Chapter Four Methods of Entry into Foreign Markets 55
4-1 Entry Strategy Factors 56
4-2 Indirect Exporting 57
4-2a Export Trading Company(ETC) 57
4-2b Export Management Corporation(EMC) 58
4-2c Piggy-Backing 59
4-3 Active Exporting 60
4-3a Agent 60
4-3b Distributor 61
4-3c Additional Issues in the Agent-Distributorship Decision 62
4-3d Marketing Subsidiary 63
4-3e Coordinating Direct Export Strategies 63
4-3f Foreign Sales Corporation(FSC) 65
4-4 Production Abroad 65
4-4a Subcontracting/Contract Manufacturing 65
4-4b Licensing 66
4-4c Franchising 67
4-4d Joint Venture 67
4-4e Subsidiary 69
4-5 Parallel Imports 71
4-6 Counterfeit Goods 72
4-7 Other Issues in Methods of Entry 73
4-7a Foreign Trade Zones(FTZ) 73
4-7b Maquiladoras 74
4-7c Foreign Corrupt Practices Act 74
Key Terms 75
Review and Discussion Questions 75
Endnotes 75
Chapter Five International Contracts 77
5-1 Lex Mercatoria 78
5-2 International Sales Contracts and the CISG 79
5-2a Contract Formation 80
5-2b Creation of the Contract 80
5-2c Breach of Contract 81
5-3 Agency versus Distributorship Legal Issues 81
5-3a Contract Law versus Labor Law 82
5-3b Home Government Restrictions 82
5-4 Elements of an Agency or Distributor Contract 83
5-4a Contract Language 83
5-4b Good Faith 83
5-4c Force Majeure 84
5-4d Scope of Appointment 84
5-4e Territory 84
5-4f Corporate Accounts 85
5-4g Term of Appointment 85
5-4h Choice of Law 86
5-4i Choice of Forum or Venue 86
5-4i Arbitration Clause 87
5-4k Mediation Clause 87
5-4l Profitability or Commission 87
5-4m Miscellaneous Other Clauses 88
5-5 Termination 90
5-5a Just Cause 90
5-5b Convenience 91
5-6 Arbitration 91
5-7 Mediation 93
Key Terms 93
Review and Discussion Questions 93
Endnotes 94
Chapter Six Terms of Trade or Incoterms 97
6-1 International Commerce Terms 99
6-2 Understanding Incoterms 99
6-3 Incoterm Strategy 99
6-4 Ex-Works(EXW) 100
6-4a Delivery under EXW 101
6-4b Exporter's and Importer's Responsibilities under EXW 102
6-5 Free Carrier(FCA) 102
6-5a Delivery under FCA 103
6-5b Exporter's and Importer's Responsibilities under FCA 103
6-6 Free Alongside Ship(FAS) 103
6-6a Delivery under FAS 104
6-6b Exporter's and Importer's Responsibilities under FAS 104
6-7 Free on Board(FOB)Port of Departure 104
6-7a Delivery under FOB 105
6-7b Exporter's and Importer's Responsibilities under FOB 105
6-8 Cost and Freight(CFR) 106
6-8a Delivery under CFR 106
6-8b Exporter's and Importer's Responsibilities under CFR 107
6-9 Cost,Insurance,and Freight(CIF) 107
6-9a Delivery under CIF 108
6-9b Exporter's and Importer's Responsibilities under CIF 109
6-10 Carriage Paid To(CPT) 109
6-10a Delivery under CPT 109
6-10b Exporter's and Importer's Responsibilities under CPT 109
6-11 Carriage and Insurance Paid To(CIP) 110
6-11a Delivery under CIP 110
6-11b Exporter's and Importer's Responsibilities under CIP 110
6-12 Delivered Ex-Ship(DES) 110
6-12a Delivery under DES 111
6-12b Exporter's and Importer's Responsibilities under DES 111
6-13 Delivered Ex-Quay(DEQ) 112
6-13a Delivery under DEQ 112
6-13b Exporter's and Importer's Responsibilities under DEQ 112
6-14 Delivered at Frontier(DAF) 112
6-14a Delivery under DAF 113
6-14b Exporter's and Importer's Responsibilities under DAF 113
6-15 Delivered Duty Unpaid(DDU) 113
6-15a Delivery under DDU 114
6-15b Exporter's and Importer's Responsibilities under DDU 114
6-16 Delivered Duty Paid(DDP) 114
6-16a Delivery under DDP 115
6-16b Exporter's and Importer's Responsibilities under DDP 115
6-17 Electronic Data Interchange 115
6-18 Common Errors in Incoterm Usage 116
6-18a Incoterms Confusion with Domestic Terms 116
6-18b Incoterms Confusion with Older Incoterm Versions 117
6-18c Improper Use of Correct Incoterms 117
6-19 Incoterms as a Marketing Tool 118
Key terms 118
Review and Discussion Questions 118
Endnotes 119
Chapter Seven Terms of Payment 121
7-1 Characteristics of International Payment Issues 122
7-2 Alternative Terms of Payment 124
7-3 Risks in International Trade 124
7-3a Country Risk 125
7-3b Commercial Risk 126
7-3c Exposure 126
7-4 Cash in Advance 126
7-4a Definition 126
7-4b Applicability 127
7-5 Open Account 127
7-5a Definition 127
7-5b Applicability 127
7-5c Commercial Insurance 128
7-5d Factoring 128
7-6 Letter of Credit 128
7-6a Definition 128
7-6b Process 129
7-6c Additional Information 132
7-6d Stand-By Letters of Credit 135
7-6e Applicability 135
7-6f URR 525 135
7-7 Documentary Collection 136
7-7a Definition 136
7-7b Sight Draft 136
7-7c Time Draft 136
7-7d Date Draft 137
7-7e Instruction Letter 137
7-7f Trade Acceptance 137
7-7g Banker's Acceptance and Aval 138
7-7h URC 522 138
7-7i Applicability 138
7-7j Forfaiting 139
7-8 Procurement Cards 139
7-9 TradeCard 140
7-10 Bank Guarantees 141
7-10a Definition 141
7-10b Guarantee Payable on First Demand (at First Request) 141
7-10c Guarantees based upon Documents—Cautions 141
7-10d Stand-By Letters of Credit 141
7-10e Types of Bank Guarantees 142
7-11 Terms of Payment as a Marketing Tool 142
Key Terms 143
Review and Discussion Questions 143
Endnotes 144
Chapter Eight Currency of Payment(Managing Transaction Risks) 147
8-1 Sales Contract's Currency of Quote 148
8-1a Exporter's Currency 149
8-1b Importer's Currency 150
8-1c Third Country's Currency 150
8-1d The Special Status of the Euro 151
8-2 The System of Currency Exchange Rates 151
8-2a Types of Exchange Rates 152
8-2b Types of Currencies 156
8-3 Theories of Exchange Rate Determinations 158
8-3a Purchasing Power Parity 158
8-3b Fisher Effect 161
8-3c International Fisher Effect 161
8-3d Interest Rate Parity 162
8-3e Forward Rate as Unbiased Predictor of Spot Rate 163
8-3f Entire Predictive Model 164
8-4 Exchange Rate Forecasting 164
8-4a Technical Forecasting 165
8-4b Fundamental Forecasting 165
8-4c Market-Based Forecasting 166
8-5 Managing Transaction Exposure 167
8-5a Risk Retention 167
8-5b Forward Market Hedges 168
8-5c Money Market Hedges 168
8-5d Options Market Hedges 169
8-6 International Banking Institutions 170
8-6a Central National Banks 171
8-6b International Monetary Fund 171
8-6c Bank for International Settlements 171
8-6d International Bank for Reconstruction and Development—World Bank 171
8-6e Ex-Im Bank 172
8-6f Society for Worldwide Interbank Financial Telecommunication (SWIFT) 172
8-7 Currency of Payment as a Marketing Tool 172
Key Terms 173
Review and Discussion Questions 173
Endnotes 174
Chapter Nine International Commercial Documents 177
9-1 Documentation Requirements 178
9-2 Invoices 179
9-2a Commercial Invoice 179
9-2b Pro-forma Invoice 181
9-2c Consular Invoice 181
9-2d Specialized Commercial Invoices 182
9-3 Export Documents 182
9-3a Export Licenses 182
9-3b U.S.Export Controls 183
9-3c Shipper's Export Declaration 185
9-3d Certificates of End-Use 187
9-3e Export Taxes 188
9-3f Export Quotas 188
9-4 Import Documents 188
9-4a Certificate of Origin 188
9-4b Certificate of Manufacture 189
9-4c Certificate of Inspection 190
9-4d Cettificate of Certification 192
9-4e Phyto-Sanitary Certificate 193
9-4f Certificate of Analysis 193
9-4g Certificate of Free Sale 193
9-4h Import License 195
9-4i Consular Invoice 195
9-4i Certificate of Insurance 195
9-5 Transportation Documents 195
9-5a Bill of Lading 195
9-5b Uniform Bill of Lading 197
9-5c Intermodal Bill of Lading 197
9-5d Air Waybill 197
9-5e Chatter Parties 198
9-5f Packing List 199
9-5g Shipper's Letter of Instruction 199
9-5h Shipments of Dangerous Goods 199
9-5i Manifest 201
9-6 Electronic Data Interchange 202
9-6a Proprietary Commercial Electronic Data Interchange 202
9-6b Network Electronic Data Interchange:SWIFT's Bolero System 202
9-7 Document Preparation as a Marketing Tool 203
Key Terms 204
Review and Discussion Questions 204
Endnotes 205
Chapter Ten International Insurance 207
10-1 Pitfals of International Insurance 208
10-2 Insurance Glossary 209
10-3 Perils of the Sea 210
10-3a Cargo Movements 210
10-3b Water Damage 211
10-3c Overboard Losses 214
10-3d Jettison 214
10-3e Fire 215
10-3f Sinking 216
10-3g Stranding 216
10-3h General Average 217
10-3i Theft 218
10-3i Piracy 219
10-3k Other Risks 220
10-4 Perils Associated with Air Shipments 222
10-5 Insurable Interest 224
10-6 Risk Management 225
10-6a Risk Retention 225
10-6b Risk Transfer 226
10-6c Mixed Approach 226
10-7 Marine Insurance Policies 226
10-7a Marine Cargo Insurance 227
10-7b Hull Insurance 228
10-7c Protection and Indemnity 228
10-8 Coverages under a Marine Cargo Insurance Policy 228
10-8a Institute Marine Cargo Clauses—Coverage A 229
10-8b All Risks Coverage 230
10-8c Institute Marine Cargo Clauses—Coverage B 230
10-8d Institute Marine Cargo Clauses—Coverage C 230
10-8e With Average Coverage 231
10-8f Free of Particular Average Coverage 232
10-8g Strikes Coverage 232
10-8h War and Seizure Coverage 232
10-8i Warehouse-to-Warehouse Coverage 233
10-8i Difference in Conditions 233
10-8k Other Clauses of a Marine Insurance Policy 233
10-9 Elements of an Airfreight Policy 234
10-10 Filing an Insurance Claim 235
10-10a Notification 235
10-10b Protection of the Damaged Cargo 235
10-10c Filing of a Claim 236
10-10d Carrier Liability Limits 237
10-11 Lloyd's 237
10-11a Principles 238
10-11b Lloyd's in International Logistics 239
10-12 Commercial Credit Insurance 239
10-12a Risks Involved 240
10-12b Risk Management Alternatives 240
10-12c Insurance Policies Available 240
Key Terms 242
Review and Discussion Questions 242
Endnotes 243
Chapter Eleven International Ocean Transportation 247
11-1 Types of Service 248
11-2 Size of Vessels 248
11-2a Dead-Weight Tonnage and Cubic Capacity 249
11-2b Gross and Net Tonnage 249
11-2c Displacement 249
11-2d Plimsoll Mark and Load Lines 250
11-2e Size Categories 251
11-3 Types of Vessels 252
11-3a Containerships 253
11-3b Roll-On/Roll-Off Ships 256
11-3c Break-Bulk or General Merchandise Ships 257
11-3d Combination Ships 258
11-3e LASH Ships 258
11-3f Product,Chemical,and Crude Carriers 259
11-3g Dry-Bulk Carriers 261
11-3h Gas Carriers 263
11-4 Flag 264
11-5 Conferences 266
11-6 Liability Conventions 267
11-7 Non-Vessel-Operating Common Carriers 268
11-8 Security Requirements 269
11-8a United States'Security Requirements 270
11-8b Other Countries'Security Requirements 271
11-8c International Ship and Port Security(ISPS) 271
11-8d Commercial Efforts 271
11-8e Effectiveness of Security Measures 271
Key Terms 272
Review and Discussion Questions 272
Endnotes 273
Chapter Twelve International Air Transportation 277
12-1 Types of Service 279
12-2 Types of Aircrafts 280
12-2a Passenger Airplanes 280
12-2b Combis 280
12-2c Freighters 281
12-2d Charters 283
12-3 International Regulations 283
12-4 Freight Tariffs 286
Key Terms 286
Review and Discussion Questions 286
Endnotes 287
Chapter Thirteen International Land and Multi-Modal Transportation 289
13-1 Truck Transportation 290
13-2 Rail Transportation 293
13-3 Intermodal Transportation 296
13-3a Types of Seagoing Containers 297
13-3b Land Bridges 301
13-3c Liability Issues 302
13-3d Aircraft Containers 303
13-4 Freight Forwarders 303
13-5 Project Cargo 304
13-6 Alternative Means of Transportation 305
13-6a Pipelines 305
13-6b Barges 306
Key Terms 306
Review and Discussion Questions 306
Endnotes 307
Chapter Fourteen Packaging for Export 309
14-1 Packaging Functions 310
14-2 Packaging Objectives 311
14-3 Ocean Cargo 312
14-3a Full-Container-Load(FCL)Cargo 312
14-3b Less-than-Container-Load(LCL)Cargo 316
14-3c Break-Bulk Cargo 316
14-3d Wood Requirements 320
14-3e Markings 321
14-4 Air Transport 323
14-4a Containers 323
14-4b Packaging Materials 323
14-4c Markings 324
14-5 Road and Rail Transport 324
14-6 Security 324
14-7 Hazardous Cargo 326
14-8 Refrigerated Goods 327
14-9 Domestic Retail Packaging Issues 328
14-9a Size 328
14-9b Legal Issues 329
14-9c Storage and Transportation Environment 329
14-10 Packaging as a Marketing Tool 329
Key Terms 330
Review and Discussion Questions 330
Endnotes 331
Chapter Fifteen Customs Clearance 333
15-1 Duty 334
15-1a Classification 334
15-1b Valuation 336
15-1c Rules of Origin 337
15-1d Tariffs 338
15-1e Dumping 341
15-1f Other Taxes 342
15-1g Value-Added Tax 343
15-2 Non-Tariff Barriers 344
15-2a Quotas 344
15-2b Adherence to National Standards 345
15-2c Other Non-Tariff Barriers 346
15-2d Pre-Shipment Inspections 347
15-3 Customs Clearing Process 348
15-3a General Process 348
15-3b Customs Brokers 350
15-3c Customs Bonds 350
15-3d Reasonable Care 350
15-3e Required Documentation 351
15-3f Required Markings 351
15-3g Merchandise Visas 352
15-3h Duty Drawbacks 352
15-4 Foreign Trade Zones 353
Key Terms 354
Review and Discussion Questions 354
Endnotes 354
Chapter Sixteen Using International Logistics for Competitive Advantage 359
16-1 Communication Challenges 360
16-2 International English 361
16-3 Special English 363
16-4 Metric System 363
16-5 Cultural Sensitivity 365
16-6 Specific Advice 366
16-6a Terms of Payment 366
16-6b Currency of Payment 366
16-6c Incoterms 367
16-6d Document Preparation 367
16-6e Packaging 367
Key Terms 368
Review and Discussion Questions 368
Endnotes 368
Glossary 369
Index 383