From Shanghai to Your Home: Trade Logistics 101
February 10, 2004So you've been eyeing
a new 42 inch flat screen television and hope to purchase it before baseball
season begins. Your biggest worry is whether the darn thing will fit in the
back end of your truck or if you will have to pay for delivery. For your new
television, though, the logistics of getting it to your home from the store
are simple compared to the trip it has already taken halfway around the world
to arrive at your local store. Many of the products we purchase have taken
more exotic journeys than most of us ever will. Read more…
Let's stick with consumer electronics for a moment. Many of electronic products
are manufactured in Asian countries, including Singapore, Malaysia, Thailand,
Korea, China, Vietnam, India, and of course Japan. But what does it take to
package and ship that product to your local store? First, the boxed products
are put into a container. Containers are basically steel boxes measured in
TEU's (twenty foot equivalent lengths, either 40ft or 20ft long, by 8ft wide
by 8ft 6in high). Two steel doors on one end open to allow loading and unloading,
either by hand or by forklift. Containers can be closed and sealed at the
manufacturing plant and not re-opened until they reach your local company's
distribution point here in the U.S. A crane places the container onto a truck
chassis and the first leg of what is known as multi-modal transportation has
begun.
When the truck arrives at the port, the container is removed from the chassis
by crane and placed upon an enormous container ship. The twenty foot container,
carrying your 42 inch flat screen, shares the ride across the ocean on ships
that hold between 3,000 and 9,000 twenty-foot containers! Having trouble picturing
a ship that big? Well the average ship of 6,000 TEUs is longer than the Eiffel
Tower and equal in length to three and a half football fields.
Even before the container is loaded on the ship, the United States government
is beginning to collect information about the container and the shipment.
In fact, since the events of September 11, 2001, the government is now collecting
information about what is in the container twenty-four hours before it is
even loaded on a ship. While the container moves across the ocean, the government
collects even more information about the Customs duties payable and the responsible
parties, both for stuffing the container and for receiving the container.
In many cases, Customs inspections, duty collection and clearances are taken
care of before the container ever arrives at a port in the United States.
When the ship arrives at a U.S. port, Customs officials continue to review
the paper work, and may decide to subject the container to a "non-intrusive"
inspection, which amounts to an x-ray. If Customs thinks a container may contain
contraband or other problem imports, the container may be fully unloaded and
inspected. Only about 3 percent of containers are actually unloaded and inspected
at our nation's ports. About 10 percent (and growing) are subject to x-rays
or other non-intrusive exams. But 100 percent of all imported containers are
subject to scrutiny via the paperwork associated with them.
Once a container is cleared by Customs (which very often happens before it
is even taken off a ship), containers are then off loaded by crane and loaded
onto either trucks or railroad cars. From there the steel containers make
their way to a place called a distribution warehouse that may be located near
the port, or thousands of miles away. At the warehouse, the steel container
is unloaded and the box containing your 42 inch television is put on yet another
truck -- this time it's an interstate truck that travels from the warehouse
to the consumer electronic store.
If the import in question isn't a finished television, but only a part for
a television that is assembled in the United States, then the part is ultimately
delivered to a factory and not a store.
This happens quite a bit these days, since U.S. manufacturing is a global
business.
International trade is not something we just read about in the newspaper;
it is something that takes place every day. It employs hundreds of thousands
of Americans in the transportation and warehouse industries as well as longshoremen
who load and unload containers at the dock. It is the story of your 42"
flat screen television trying to find its way to your home.