V. Read the text.

INTERNATIONAL TRADE AND LOGISTICS

International trade is increasingly part of the global production process. Deliveries of components that are bought abroad to be used in global production processes depend on reliable and secure international logistics services. This trend is not only relevant for industrialized countries, but developing countries, too. Today manufactured goods account for 80 % of developing countries’ exports, up from just 20 % of two decadesago. Industries search for economies of scale in production processes and take advantage of the potential for a global division of labour.

Multiple-site manufacturing and assembly, working on reduced inventories and spanning countries and continents, is a common practice. As a consequence, shipments are becoming smaller but more frequent, and require efﬁ cient, speedy and ﬂ exible distribution systems. Under these conditions, manufacturing companies search for the most adequate trade logistics option as a trade-off between production methods, inventory policies and transport requirements. For example, a manufacturing company might attempt to buy its raw material as late as possible, so-called “Just-In-Time” (JIT), and to sell its manufactured product as soon as possible. Based on good information systemsand reliable transport, this strategy will produce goods “to order” and reduce storage needs and costs.

In international logistics, transportation is the dominant activity. The transportation of goods allows geographical overcoming of big distances and passing of borders. A lot of companies are involved in cross-border transportation. Transportation and associated handling processes constitute the highest cost factors for the international flow of goods. So, there is the need to develop good transportation systems to keep these costs low.

The logistics infrastructure of a country includes the transport network of roads, railways and waterways. The success of companies is dependent on the quality of the logistics infrastructure. The state takes care of maintenance of the transport networks and provides institutions for logistic services like postal service. Logistic services of a country include the general offer of local suppliers and logistics service providers. Moreover, information technologies are very important because they provide decision-relevant data to plan and release the whole logistical processes.

VI. Give the answers to the following questions according to the text:

1) What do deliveries of components that are bought abroad depend on?

2) What is the percentage of export goods produced by developing countries?

3)Why are shipments becoming smaller but more frequent?

4) How can you define the term “Just-In-Time” (JIT)?

5) What are the results of “Just-In-Time” strategy?

6) What does the transportation of goods allow?

7) What is the success of companies dependent on?

VII. Match the beginning of the sentences (A) with their ending (B):

A	B
1) The term the Incoterms refers to	a) bears the cost, responsibilities and risks involved with an international transaction.
2) The term is agreed upon	b) result in a total loss of the value of the goods.
3) Incotermdetermines which party	c) to simplify foreign transactions.
4) Errors made at this stage can easily turn	d) the abbreviation of three words: INternational COmmercial TERMS.
5) Choosing the wrong trade term could	e) avoid costly misunderstandings between buyers and sellers.
6) Incoterms have been standardized	f)by the buyer and seller.
7) These trade terms help	g) a tidy proﬁ t into a big loss.

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