Global trade – what are the keys to success?
Feb 13, 2019 Comments (0)
The International Monetary Fund, the International Grains Council, the World Bank, the World Economic Outlook, Barclays, and Goldman Sachs predicted that things aren't looking good for trade in 2019.
And the ongoing trade war between the US and China, Brexit uncertainty, increased protectionism in the west, rising manufacturing costs, shrinking margins and supply disruptions are all contributing to a global trade slow down.
But there are still lots of opportunities to tap global trade improvement potential and generate value for businesses. For example by making their international supply chains more flexible and capable of easily implementing regular adjustments and changes.
Such flexibility is best facilitated by integrated global trade IT systems that standardise across country-specific processes and regulations. They form the basis for the required transparency to ensure a holistic view on options for international procurement or distribution in global markets, including transport costs, duties and taxes, and fees for other services such as brokerage, transhipment, quality assurance, licenses, or localisation.
Businesses need a deep knowledge about their own global trade processes and awareness of the legal framework – both local and global. Such knowledge relies on powerful IT landscapes and data services, which empower a company to take advantage of customs procedures with economic impact, generate transactional savings, and prevent compliance violations with its broad repercussions.
A company’s ability to ensure full data consistency and transparency across local and global supply chains is vital today. But global trade setups across UK industry sectors often suffer from a disjointed system landscape of in-house systems, master databases, carrier systems, broker systems, and a mix of automated and manual processes, making large parts of global trade operations non-transparent and inefficient.
Potentials for cost savings, performance increases and improved customer satisfaction can only be tapped, and respective measures prioritised, when there is visibility on operations. And this requires digitisation, standardisation, and integration of global trade processes.
Take Brexit planning for example. What would a hard border between the UK and the EU mean for your business? As customs declarations would be required, do you have the right staff and software to make declarations for UK imports and exports? If you were to outsource this to a customs broker, do they have the capacity to cope? What impact would a hard border have on your customs duty liability? Would it make sense to source elsewhere? Thinking through different scenarios makes it easier to respond to change.
Successful companies are flexible enough to handle risk and opportunities within a short lead time – be it Brexit, trade embargoes, new trade agreements, new trade lanes or partners, without removing the focus from daily operations. It also helps to have a strong customs management solution in place. The right platform for managing customs processes offers end-to-end IT integration and smart automation, thus accelerating customs processes and saving valuable resources for imports and exports in key EU export economies as well as worldwide.
Last but not least, new technology also offers additional opportunities in global trade: Artificial intelligence (AI). Forward-looking businesses that succeed in translating complex foreign trade law into machine language and at the same time reach a high level of overall automation in customs execution will reap the benefits of their digital landscape even more. Self-learning algorithms, for example in the area of product classification, are already key components of modern global trade and customs platforms, but AI developments are fast advancing in other areas as well.
Pushing the digital agenda forward in global trade and customs management holds great potential for businesses – no matter which way local market or global trade developments in the future will go.
Geoff Taylor is General Manager of AEB (International) Ltd in the UK and has been with the company since April 2017.