The exchange of goods and services between countries and across borders is referred to as international trade. Domestic trade happens when this business is conducted inside of a country’s borders. There are many differences in international and domestic trade, but the basic principals are the same.
One of the main differences is cost. The cost of trading internationally is considerably higher than trading domestically. This is true for many reasons. One reason is time. The time that it takes to transport goods across oceans can cost businesses money. There can be time wasted at borders, tariffs must be paid, and customs inspections can be cumbersome. However, with today’s ocean shipping logistics and advances in ocean freight transport, many of these problems are disappearing.
Modern cargo ships can carry a lot of freight, reducing the cost of shipping for everyone. Global standardization aspects of shipping containers have made the process of shipping from one country to another much easier. When the equipment and cargo match from country to country, there is no need to repack or transfer goods to new containers. This also has increased the security of shipping overseas.
It may seem that importing and exporting goods could have a negative effect on a country producing and transporting their own goods inside of their own borders, but that is not necessarily true. Many countries benefit from importing the materials needed to drive their own production industry. Even technologies and services shared across borders can benefit a country’s production. Additionally, international trade motivates countries to work together, empowering each country to benefit from the other.
International trade has directly contributed to the industrialization of many countries. Ocean shipping advances have made it possible for corporations to do business all over the world. The standardization of practices is recognized worldwide. This helps countries to overcome problems that used to be associated with international business.
Take, for instance, the path that a standardized container can take. Goods that are produced in the United States can be loaded directly into the container of a semi-trailer truck. It can be taken and moved directly to a train car and then can be transported by rail. From there, it can be unloaded at the dock and put directly on an ocean freight or cargo ship. It travels across the ocean where it is met with the same standardized equipment that can move it from the ship, to a barge, truck or train.
In the past, international shipping was a lengthy, expensive, and sometimes unpredictable endeavor. With modern tracking and standards put into place by industry leaders worldwide, international trade is a reliable, beneficial and profitable way to do business. Advancements in logistics have changed the face of global economics, industrialization, and international trade.
39 Comments on “Differences in Domestic and International Trade”
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Are customs officials particularly difficult to deal with in Turkey? I have a friend who was socked with some unanticipated high custom fees at the Istanbul port. He & his attorney were able to negotiate them down to 1/2 of the original fee for two weeks time. At the end of the two weeks time he had all the fees there ready to be paid, and they told him they needed all of the original fee instead. Is this usual procedure in Turkey?
Hi Joan – unfortunately you can run into difficult situations when dealing with customs at any port. Due to government regulations, most countries do not negotiate. Hope this helps!
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