What is International Logistics, and why does it seem so complicated?

I recently had a conversation with Bob about the complexity of international logistics and transportation. Bob is one of my customers and it became apparent that he knew a lot about their business but was quite lost by tying together all the involved disciplines of international logistics. Bob is a smart and humble man and said: “Let’s start at the beginning. Please explain it to me in simple terms.”

International logistics or global transportation (aka Freight Forwarding) is one part of the large Supply Chain Management discipline. It encompasses moving freight (physical goods) via ocean and air, customs compliance, and pickup and final mile transportation.

International Logistics is often delivered as a service (by Freight Forwarders) to companies that either import or export goods, such as raw materials for production or finished products, as a crucial part of running their business.

“Globalization” was a buzzword in the 1990s. It was not just a word: World trade interconnected countries more than ever before, which significantly increased the importance of International Logistics. In 1995 the World Trade Organization (WTO) was established, and world exports of goods stood around $6 trillion annually, by 2025 they skyrocketed to over $26 trillion. 

Bob had listened with attention and concluded: “...and International Logistics has become more complex, because there are many origin (export) and destination (import) countries worldwide that participate in the trade!” That is exactly correct. Each country has rules and regulations, duties, taxes, quality standards, and reporting requirements. In addition, there are many parties involved in transporting goods from point A to point B. For example, the suppliers at origin, the freight forwarders, the customs brokers for compliance (export and import), the carriers (ocean and air), and the companies receiving the freight.

International logistics is hard to grasp because of its complexity - I call it the Black Hole of Freight Forwarding. It involves many independent specialists, each responsible for one part of the process, making it difficult to see the whole picture.

Over the coming articles, I'll break down what's inside that black hole - who the players are, how they interact, and why understanding the whole picture leads to better logistics decisions.