Importance of Logistics in Global Trade

International logistics have taken on new importance in the modern era. As economies grow, they naturally allow for increased specialization. In other words, individuals and businesses can focus on doing fewer things but doing them better. A small town might have one bakery, while a city often has specialty shops for cupcakes, donuts, and pies, along with broader bakeries. Such specialization spurs competition and creativity, as well.

In national economies, regions can specialize, too, attracting a critical mass of talent and capacity that allows for greater productivity and innovation than would otherwise be possible. The United States has seen the development of many such regions. For example, auto manufacturing in Detroit drew on specialized businesses from the surrounding states to make high-precision car components.

Over the last century, costs and time delays associated with international communications have plummeted. International shipping has scaled to the point where the cost per pound or cubic foot to send large quantities of physical products or materials is often a negligible component of the overall price. English has more non-native speakers than native ones, allowing for a standard means of communicating in almost every business center worldwide. Translators and translation software are both available when a common tongue is not.

There are plenty of other forces pushing operations in a global direction, from policy incentives to the increasing dispersion of skilled workers (as talented humans everywhere gain better access to education and training). The ability to operate internationally — to source, sell and hire from around the globe — is an opportunity for many businesses and a mandate for others that want to stay competitive.

But once a business starts straddling its operations across international borders, its logistics become international logistics. And that’s why international logistics is more important than ever before.