Services Supporting International Trade

Services Supporting International Trade

International trade requires several types of services assumed by a number of actors:

  • Distribution services are related to the function of transportation and warehousing, which are physical operations performed on trade goods. A carrier, such as a truck or a maritime shipping company, and a terminal operator provide transportation services while a cargo owner can have own account transportation and warehousing.
  • Transaction services include activities for managing international trade. Procurement involves finding suppliers, setting contracts, and ensuring continuity in the supply. Customs are all the regulatory compliance so that traded goods meet national standards and that duties are paid. Freight forwarders regularly assume this function on behalf of their customers. Finance provides capital to invest in trade activities, such as the purchasing (leasing) of equipment and the construction of facilities, an activity performed by investment banks. Cargo also needs to be insured against common risks (delays, theft, damage), a function assumed by insurance companies, some also involved in finance. Since many trade transactions are settled through currency exchange drawn from corporate deposits, commercial banks are major actors in settling transactions and letters of credit.

In recent years, actors known as third-party logistics providers (3PL) offer a wider range of trade services to their customers by controlling crucial transportation and transaction services. Several 3PL are carriers that have decided for strategic purposes to expand their range of services to provide added value by combining the physical assets they control (ships, vehicles, warehouses) with procurement and customs services. Fourth-party logistics providers (4PL) have also emerged, mainly focusing on non-physical asset trade services.