Growth Across a Flatter World

Jim Barber | UPS

In an economy that grows increasingly connected every day, the relevance of exports and global trade has never been more important. But if trade – and especially international trade – is as vital as political leaders and businesses say, why are only 1% of U.S. businesses trading across borders today?

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70% of purchasing power lies outside our borders.

That 1% figure, from the U.S. Department of Commerce, is an arresting data point. We just aren’t seeing the light on international exports. Many businesses I get a chance to speak with all over the world see the value in going beyond their borders for new business. We’re leading a charge to help businesses at home see the huge opportunities overseas. They see more clearly when I share “world is getting flatter” stats: As we edge toward a world where nearly a billion people make up the growing middle class, 70% of purchasing power lies outside our borders.

But seeing opportunity and seizing it are entirely different things. One of the most interesting parts of my job running our international business is connecting companies to our network spanning 220 countries and territories. Our network enables us, literally, to provide global access to markets for our customers, big and small.

Our multi-modal network moves around 2% of the world’s GDP on an average day. But, we rely on more than just the operational network. So what is it? Some call it our secret sauce, but the truth is that we don’t produce anything you can pour out of a bottle. What makes our integrated network so unique are the 400,000 passionate people who make it hum.

UPS went international in the 1970s, starting with Canada and West Germany. Germany was the beginning of something big – taking our business international, to a country that knows a thing or two about exporting.

Today, Germany is still an export powerhouse, ranking as the world’s third largest exporter. Germany exported $1.5 trillion in 2013, right behind the U.S.’s $1.6 trillion. It may fit into Montana and only have a population of 80 million, but we were drawn to choose the export powerhouse that punches well above its weight as our first venture in Europe. Plus our air hub in Cologne helps us deliver to every address in Europe thanks to the region’s team of 44,000 employees and 8,800 vehicles.

The U.S. remains the world’s second largest exporter after China, where UPS is present in 330 cities with nearly 6,500 employees. In China, we operate two major air hubs and more than 200 flights weekly. We have the footprint in-country to make trade happen.

Forty years and hundreds of airplanes later, we’re well-placed to ask you to think of any market that you could only dream of tapping into, whether in Europe or an emerging market such as China, Mexico, South Africa, India or Brazil. We’re not just delivering boxes – we’re facilitating international commerce.

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Think cross-border. Get comfortable with the term as it is the future in this interconnected world.

We are one of the world’s largest customs brokers with a best-in-class team of more than 350 dedicated brokerage experts in over 60 countries. Having filed over four million customs entries this year in the U.S. alone, they have solved enough problems to help you avoid them. And it’s not just for the multinationals.

We are also helping sparky new startups who believe enough in their future growth to seek a provider like us who can help them scale quickly (it’s in our own startup DNA to think big).

Think cross-border. Get comfortable with the term as it is the future in this interconnected world. That was the case for our startup, launched by two guys with a big idea, $100 and a couple of bicycles back in 1907 before the term “startup” became the buzzword it is today. We are in a position to help businesses go cross-border given our own experience.

Businesses don’t have to go it alone. The U.S. Commercial Service is in more than 100 locations across the country, and it is feeding into pending agreements that eliminate tariffs and other trade barriers. Two major agreements being negotiated by the U.S., the Transatlantic Trade and Investment Partnership (TTIP) and Trans-Pacific Partnership (TPP), seek to promote greater trade with the European Union and Asia.

Eliminating tariffs is just the start. These agreements will simplify procedures, remove discrepancies between regulations and harmonize customs-related laws among participating countries. Together, these agreements could significantly reduce trade barriers among countries that comprise more than 60% of global GDP.

TTIP and TPP could set the new gold standard in capitalizing on growing global demand for goods made by the world, for the world. But while these agreements stand to add the most to our economies, more localized efforts are needed. Businesses are wary to ship internationally because the processes are confusing.

Violations and fines can significantly limit the ability to expand around the world. Complicated customs procedures can hold up the flow of packages, deeply cutting into businesses’ ability to serve customers. Those same delays hamper countries’ macroeconomic growth.

Take Mexico, for instance. Mexico has production power that could rival China. Its strategic geographic location
is ideal for international trade across the Americas. Improving regulations and streamlining border processes could bring tremendous opportunities.

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The world has gone global – we need to seize this moment

A recent update to the U.S.-Mexico aviation agreement will be a great step once it’s ratified. If Mexico turned next to simplifying the movement of goods across its border and addressing its customs pinch-points, there would be even more trade.

Encouraging uniform trade and business operation standards is vital to Mexico’s success, just as it is here in the U.S. The world has gone global – we need to seize this moment and drive global solutions that bring local growth.

Our expertise goes well beyond the brown package cars you see daily. The person in the driver’s seat is also in the driver’s seat of international trade. I should know – I started out in this company driving a package car. The logo was different then but the dedication to service remains top of mind.

With ground, air and ocean freight transportation services, our people run an integrated, global network of warehousing and distribution facilities. We enable you to plug into our network – leave the logistics to us and focus on what you do best.

Taking your business to the next level and tapping into new markets should be a no-brainer with the right partner. Talk to us about it. We have the global infrastructure and the experienced professionals to make global trade your next frontier. goldbrown2

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Jim Barber is President of UPS International

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Reprinted with permission of Longitudes, the UPS blog devoted to the trends shaping the global economy.

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