What does History tell us?
International Logistics involves flow of materials (raw materials, semi-finished and finished goods) across geographic international boundaries. This concept has been prevalent since ancient times. Roman Trade1 spanned multiple countries, routes and transportation modes. The following illustration depicts common trade routes in the Roman Empire and corresponding shipping durations. Usage of water ways was most effective in those geographies.
Figure 1: From http://historylink102.com/Rome/roman-ships.htm
16-21 days | Alexandria to Ostia |
9-10 days | Alexandria to Antichia |
10-12 days | Byzantium to Gaza |
3-5 Days | Ostia to Carthago |
9-10 days | Ostia to Gades |
20 days | Rome to Caesaria |
What is the current scenario?
Fast forward to the current and shipping lanes look similar to the picture below. This does not encompass modes of road, rail and inland waterways. Combine all the transportation modes available and there are myriad combinations of options. Is Optimization across modes a realistic possibility?
Figure 2: Shipping Lanes, Anywhere in the Solar System
What are the Procedural challenges?
Overseas or International logistics involves a high degree of regulatory compliance. Considering that the product or material crosses multiple country boundaries and territorial waters, there is usually a lot of documentation involved. Adhering to different international and national trade restrictions involve a fair amount of knowledge and fees. Given these complexities, shippers avail services of Freight Forwarders to package, label, document and insure goods. Some goods are also shipped via express carriers. Lead-Time and Just-in-Time planning is difficult given these basic constraints.
What does an International Move involve?
International shipping may involve rail, road, air and water modes of transport. There are often one or more “critical” legs. Critical legs are usually the longest legs and involve ship/air travel to and from sea or air ports (at origin and destination points). Getting to and from the ports at origin and destination involves multiple legs and drayage1 movements. A complex Multi-Modal International shipment may involve as much as six legs. The example2 below illustrates Intel Corporation’s Inbound Movement of Pre-fabricated IC Chips from South-East Asia to its Fabrication plant in Arizona, USA.
Leg 1: Integrated Chips (ICs) are manufactured at its sub-contractor locations across Korea, China, Japan and Taiwan. Drayage movement from manufacturer plants to nearest rail-hub
Leg 2: IC’s sent to Penang Malaysia via Rail
Leg 3: Penang Rail Hub to Airport Drayage Movement
Leg 4: Penang Airport to Los Angeles Airport
Leg 5: Los Angeles Airport to Chandler, Arizona assembly plant via Road
Imagine picking the right combination of orders to consolidate on each leg, right shipment type (Truckload, Less-Than-TruckLoad, Parcel, Compartment, Container, LCL, Parcel, Express etc), right carrier, right schedules while meeting time and capacity constraints at all of the intermediary transshipment points. Assuming we pick the most optimal routing choices for a bunch of orders, now imagine the task of executing to the transportation plan and adhering to time selections across multiple cultural differences. The following diagrams illustrate some other Intermodal movements.
Is this problem Plannable?
Solving a simple Vehicle Routing Problem optimally in itself is a hard problem and uses up enormous computing power. Solving the above described International Move optimally is next to impossible. The only option is to decompose the entire problem into stage-wise pieces and pick the most critical/constrained leg to optimize. Typically Airline or Shipping leg forms the critical leg. These legs have fixed schedules for vessels including departure/dispatch and arrival/delivery horizons. 
The only optimization opportunity is by cost across multiple carriers. Once the core leg is planned, it is feasible to schedule the precedent and antecedent legs appropriately. Real-time adaptive optimization will be required to adjust the original proposed solution corresponding to specific execution progress. Here is a high-level flow chart to address this problem:
Step 1: Identify “Critical” legs of the Multi-Leg Route. These critical legs typically are highly constrained in terms of carriers and vehicles/vessels, generally called resources
Step 2: Depending on the available resource, select the best consolidation of orders and firm up the Critical Leg Plan
Step 3: Work in both directions (forward and backwards) to define the schedules for the incoming and outgoing legs of the critical legs (rail routes in the above diagram)
Step 4: Plan the “Into Railhub” and “Out of Warehouse” legs.
Step 5: Iterate through the entire Transportation plan to evaluate consolidations of orders and assignments to carriers/vessels, with a goal of improving costing and customer service commitment.
Step 6: Schedule unscheduled orders via Parcel carriers
There could be commensurate bottom-line savings based on this proposed planning effort.
What are the Execution Challenges?
Execution to the defined transportation plan is generally accurate. Since the probability of changes to vessel schedules are rare, they can be treated and managed as exceptions. Key challenges are around packaging to address global security concerns, ability to track pallets through to destination, managing documentation at each port of stop and managing cultural/bureaucratic regulations at each location. All of these are best handled by partnerships with local agents who are well versed with local laws and regulations.
In conclusion, although difficult, planning for International Logistics is possible and will result in empirical savings to the bottom line of the company. Aside from the costs, Planning is essential to ensure availability of right quantities of raw materials, semi-finished and/or finished goods at the right place and time.
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