Issues Facing Logistics Management in America - Case Study Example

Issues Facing Logistic Management in America Name: University: Lecturer: Date: Issues Facing Logistic Management in America Introduction Basically, international trade is the process whereby services, goods and capital is exchanged across the borders or territories. Research shows that in major countries across the world, international trade is the important share of the international market. While international trade was there over many years ago, its roles political, social and economic importance has been significance over the recent century. There are various factors that impacts international trade. Some of the major one includes transportation, outsourcing, Multinational Corporation, industrialization and globalization. According to Samuelson, (2001), increasing of globalization facilitates the advancement and continuation of globalization. International trade is paramount as without it, nations will ultimately be limited to goods and services produced within the country. International trade also promotes the coming together of different nations especially when addressing the common global challenges such as peace and global warming amongst different nations. Like domestic trade, international trade adheres to the trading principles such as labor and capital which is mobile across the countries. The main different between the two is that international trade is more costly because there is imposition of added charges such as tax, tariffs time as a result of border delays and some challenges such as culture legal or language. International trade as seen by McKenzie, (1954), is a branch of economics which when combined with the international finance it will in essence form larger branch called international economics. In this essay, I will explore an overview of key trends in international trade in United States of America (my chosen country and the relevance discussion about the day to day operation of the international trade (Steedman, 1979). Trends in International Trade in America According to the research, international trade in services and goods and the flow of capital affects nearly all people living in the United States of America. Whether a person buys cars, computers, shoes, gasoline, work in a firm that compete with imports the influence of international trade has become dominating factor in the current century. While the United States of America is one of the leading giants of the exporters across the world (Germany and China are leading), the American sales internationally is influenced by huge demand by the consumers in the United States and industry for imported products. United States of America has been recording steadily increase of the revenue accrued from the exports since 2005 through 2008. However, during the 2009 economic recession, the exports drop drastically by 39 percent whereby there was a lot of imports than exports within the country. In 2010, the international trade recorded 28% in 2010 and 15% in 2011 as the economy in the United States recovered. In America, the International trade is and its role to the national economy is highly recognized. For instance, the deficits among many aspects of international trade enter into the public policy through many portals. Some of the major portals have been discussed below (Jones, 1961): At the macroeconomic level, the deficit of the trade is of highly concern because it affects United States of America’s economic growth. The debt load of economy, the labor and interest rate. The trend shows that as the as the dollar weakens, the prices of goods and services rises disruption of the financial markets occurs and the economical status of the entire population will automatically be reduced. However, whenever there is large boom of the economy as the result of domestic demand it will then eventually generate the purchase of both imported and domestic goods. During the strategic level, trade ties usually results to ties which will result to bilateral nations which will eventually lead to the formation of formation of free trade agreement or security and political arrangements. Trade can also be used as an essential tool of strategic objectives which need to be carried out in a particular way especially through provision of preferential trading arrangements or during the imposition of trade sanctions. In microeconomic level, imports of certain products will eventually lead to the generations of trade pressures and frictions from constituents which will shield the Americans and local producers from external competitors. This is done with the aim of assisting local producers to be more competitive. In the household level, trade agreement and escalating trade deficit is usually related to employment, especially concern over job loss which is the highly relevant issue for the United States of American’s family. Recent Development Trends There was an increase of exports of merchandise products between January- July 2012. Statistics indicates that the increase was 6 percent. However, the rate of the imports in the same year increased by 5 percent. Also trade deficit in the United States rose to 5 percent. This indicates that since the rate of imports is greater than exports, then export must increase by a larger percentage so as to balance the trade balance. In 2011, there was a steady increase of exports increase as a result of recovery of financial crisis. Another good indicator of financial recovery is that there was an increase of 18 percent in the fuel deficit (Samuelson, 2001). The American leading export commodity in 2011 changed from historic leading export of civilian aircraft, equipment and engines. It was noted that there was an increase of 14.5 percent from 2010 up to the 70 percent. The second leading import commodity to the United States was motor vehicles which rise by 7 percent and it was mainly imported from China. U.S exports to products to China increased by 13 percent. Comparatively, the trade deficit increase by 8 percent in the two countries (Steedman, 1979). In 2009, while the global financial crisis increased, the United States of America among many other developed countries was reduced into recession, the reducing of the United States contributed into the growth in the economy. The United States recession would have been critical without the shrinking of the American trade deficit. However, it was noted that the faltering global economic conditions that result into the economic declining in demand for American domestic services and goods. As the imports reduced in 2009, it drastically increased in 2010 and 2011 which eventually forced the companies which competes with the imports to face declined demand as the domestic economy remained not good. The economical conditions created increased pressures on the political forces with the aim of protecting domestic industry from imports not only in America but the across the globe. While the world is recovering from great recession, countries are striving to capture to increase in global trade through keeping the value of their currencies low, especially in China (Leamer, 1980). Dollar and the Trade Deficit Generally, the American trade deficit portrays an image of saving in the local economy and relying on capital imports which will finance the short fall that occurred. Saving shortfall is experienced as a result of high spending which is financed by borrowing. The government borrows for deficit budget covering, business borrows for their investments, house holds borrows for the consumption. Saving shortfall in international transaction level is revealed by flow of foreign capital into the United States during payments of excess of imports. Whether the imports of services and goods depends on how it is used in that if used well, it will facilitate and improve the economy. If such imports used to finance investment project, which will eventually generate the future income of the country (Krugman, 1988). How the Transport Infrastructure in America has influenced the development of International Trade and its associated Transport Activity Transportation of goods across sea, air and land present economic opportunities while also posing significance environmental challenges which include greenhouse gases and criteria air pollutants. EPA is constantly working with international partners to reduce negative impacts of rapidly increasing international trade (Bowen, 1998). United States of America has done major advancement to facilitate improvement of transportation of goods and services across the world. Various airports have been constructed in all the major cities in America. Here, the traders get link to the external world whereby the transport of goods and services. The airways connect other major states in America and the international trade is transacted in an efficient way. The government has also built good roads which connects the neighboring countries and facilitate the transfer of goods and services. According to the recent research, finance, goods information and good’s people among the Unites States of America is new. In the recent decades, the flow of finance and trade has grown to unprecedented levels and has become essential to the whole economy. American has influenced the economic emergence of developing countries (India, China Brazil). It has dramatically increased trade flows overall and has gone further to the balance of international trade flows from right from developed to developing countries. The transport choice will depend on a number of factors such as characteristics of the product which need to be transported, geographic proximity, and other essential services such as communication. In America, Seaborne transportation, according to the research carries majority of goods internationally. Statistics reveals that the seaborne has increased by 4 percent since 1970’s. Under normal circumstances, heavy goods such as industrial goods and machinery are transported through the sea. This method is cheap as compared to road and air transport. It also facilitates the transportation of bulk goods. The man disadvantage is that there are associated delays under such system. Aviation mode of international transportation is mostly used to carry passengers from one country to another. Also, the system provides rapid transportation of time sensitive and high value goods. Since 1970, the research shows that the volume f cargo has increased by 9 percent every year in the United States of America. As mentioned earlier, land transport in America facilitates the transportation of goods from one country to another (Bowen, 1998). . Assessment of the key transport-related opportunities and challenges facing the development of international trade for America over the next 20 years Transportation system consists of wide variety of scales and modes, from local to international scope. It is in fact very difficult to cope with the challenges which occur due to day to day operation of the business. It is becoming difficult to reconcile different perspective such as roads traffics and other related factors. Excess purchase of vehicles has not only caused traffic in major urban areas, but there are also various accidents which has occurred as a result of vehicles collisions. Another key challenge is environment. As a result of emissions of carbon dioxide, global warming has been a major increase which endangers the life in earth (McKenzie, 1956). Transport and climate change In America, transport has influences and impacts on climate change in number of ways. Transportation activities such have vehicles accounts for 24 percent carbon dioxide emissions in the USA. As a result, they account for regulatory pressures which will improve environmental performance in regards to the green house. Transportation activities are expected to be negatively impacted by the climate change. Potential impacts on the infrastructure needs to be constantly monitored so as to build the lifecycle between climate change and the earth so as to reduce regional mobility. The prospects of the sea services are posing great problems to the sea levels. Transportation on water quality The contribution of transport to the pollution of ocean and rivers has increased over the past years. However, it is an issue which has been addressed by the international legislation. Specifically, positive changes have been made in key areas such as oil spills, waste and ballast and water. The trend in United States of America indicates that as the legislation efforts increases, the level of the incidence continues to reduce. And it is expected that in the next 20 years, major changes will be achieved. For instance, most of the countries in the developed countries has partnered with America to see that they joint hands in addressing such challenges (McKenzie, 1956). Transport and land take Increased demand for transportation, according to the research is placing enormous pressures for the new structure. Many of the facilities such as ports and airports require large tracts of land for the initial operation of the external links which need to be transported. Conversely, rapid materialization in the developing countries has also cased challenges whereby land is required for transportation purpose (Steedman, 1979). In United States of America, transport is always being integrated in global production system. Research shows that transport is an integral part of the production process. Energy, especially the availability of oil as indicated in the research is one of the silent factor in the transport system across many countries in the world. The prediction is that the shift in the oil structure and the replacing of oil with other energy efficiencies will alter the transportation in the next 20 years. Conclusion International trade has facilitated the transfer of goods and services from one country to another. It has opened up economic opportunities in America and other nations across the world. However, it should be remembered also that international trade has caused a lot of challenges as discussed above. Technical problems encountered during transportation of goods and services from one country to another have indeed been a barrier to international trade(Bowen, 1998). . In my opinion, America should continue partnering with countries across the world to offer joint applicable policies which will limit the emissions from the transportation sectors while at the same time avoiding undesirable constraints. Bibliography Bowen, H. (1998). Applied International Trade Analysis. London: Macmillan Press. Jones, R (1961). Comparative Advantage and the Theory of Tariffs. The Review of Economic Studies Jones, Ronald W. 1961 Comparative Advantage and the theory of Trarrifs; A Multi-Country, Muti-commodity Model, Review of Economic Studies, Jones, W. (1961). Comparative Advantage and the theory of Tariffs; A Multi-Country, Multi commodity Model. Review of Economic Studies Krugman, P. (1988). International Economics: Theory and Policy. Glenview: Scott, Foresman. Leamer, E. (1980). The Leontief Paradox Reconsidered. Journal of Political Economy 88 (3): 495–503 McKenzie, L. (1956). Specialization in Production and the Production Possibility Locus. Review of Economic Studies McKenzie, Lionel W. 1954 Specialization and Efficiency in the World Production, Review of Economic Studies, 21(3): 165–180. See pp. 177–9. McKenzie, W. (1954). Specialization and Efficiency in World Production. The Review of Economic Studies Samuelson, P. (2001). A Ricardo-Sraffa Paradigm Comparing the Gains from Trade in Inputs and Finished Goods. Journal of Economic Literature Steedman, I(1979) Fundamental Issues in Trade Theory, London: MacMillan and New York: St. Martin's Press. Steedman, Ian 1979 Trade Amongst Growing Economies, Cambridge: Cambridge University Press. Read More