Five tips to ensure your business is reaping the benefits of global trade.
First came Brexit. Then came the US’s departure from the Trans-Pacific Partnership (TPP). And recently, there have been talks on renegotiating the North American Free Trade Agreement (NAFTA).
Countries that previously depended on trade with the US to conduct business are in fact looking elsewhere and diversifying their portfolios, according to Simon Evenett, director of Global Trade Alert.
“This isn’t the first – nor will it be the last – time we feel the effects of trade negotiations.”
These are some of the recent shakeups that have left businesses using words like “in flux,” “uncertain” and “ambiguous” to describe today’s global trade marketplace.
While this feels like an unprecedented global trade era, one thing is certain: This isn’t the first – nor will it be the last – time we feel the effects of trade negotiations, tax reform, regulatory changes and the modernization of technology.
Some companies are taking a “wait-and-see” approach to global trade, but waiting is a mistake. Shying away from global trade now would only further erode new market business opportunities.
Companies should embrace global trade now more than ever.
Here are five tips to make sure your business is prepared for the next wave of disruption – while reaping the numerous benefits of global trade.
Are you compliant? Are you sure? From shipping and customs delays to fines and penalties, companies face many issues when they are not trade compliant.
During times of global trade uncertainty, like what we’re experiencing today, keeping up with changing requirements for trade and customs regulations is of the utmost importance.
Let’s take what’s going on in Europe for example. After the implementation of Brexit, the UK will have to implement their own set of customs procedures and documentation. In other words, they will need their own global trade compliance strategy.
For companies doing business inside and outside of the UK, it’s important to make preparations now and take the preventative measures necessary to ensure they are trade compliant once Brexit is complete.
Unfortunately, not many companies are taking this proactive stance. According to a survey by Global-e, more than two-thirds (68 percent) of UK-based retailers have yet to start preparing for Brexit, and more than half (51 percent) are already seeing their sales impacted.
This stresses the importance of getting a head start on planning for these inevitable changes in trade compliance. Doing so ensures global trade success.
Just 23 percent of companies are taking full advantage of all free trade agreements (FTAs) available to them, according to the 2016 Global Trade Management Survey from Thomson Reuters and KPMG International.
“Just 23 percent of companies are taking full advantage of all free trade agreements.”
These businesses are reaping the savings benefits associated with either free or reduced duties, and they have the upper hand among competitors by selling goods at certified, reasonable prices. Despite the current level of uncertainty around FTAs, it’s important for companies to know and understand all of the FTAs available to them, especially if they want to stay competitive.
The customs trade industry is experiencing a technological revolution. A new digital “single-window” like the one implemented in the US is replacing archaic forms of business process, including all paperwork and legacy systems. A more streamlined system is forming in its place.
Prior to the implementation of these single-windows, international trade procedures usually involved many touchpoints and manual, time-consuming tasks.
In the coming years, many countries will move to the single-window concept, allowing shippers and traders from around the world to streamline all of their documentation seamlessly and efficiently through the new system, lessening the burdens associated with conducting global trade. Staying on top of these changes will be a large but necessary task for trade compliance professionals.
Many small and medium-sized companies find the process of going global intimidating. Factors like cost, complexity and new business risks that come with expansion are just some of the reasons they shy away from becoming a participant in global trade.
There are also challenges for companies already participating in global trade when it comes to keeping up with constant changes in requirements, rules and regulations. There are global trade management solutions available to help streamline the processes associated with international trade.
“Shying away from global trade now would only further erode new business opportunities.”
According to Will McNeill, principal research analyst with Gartner, global trade management adoption in 2016 was roughly 25 percent, and it will continue to grow at a modest rate. Having a solution available that can help standardize compliance, maintain updated regulatory trade data, manage risks and screen trading partners, among other tasks, is just what companies need to help navigate the current state of global trade.
Fear of the unknown prevents many companies from taking advantage of international trade, but companies don’t have to do it alone. In addition to global trade management solutions, companies should consider partnering with an expert that has the knowledge, capabilities and existing resources to help companies conduct business globally.
For example, working with an experienced customs broker like UPS can help companies stay ahead of changing regulations and maintain compliance. Partners can also give you access to web tools that help companies do things such as calculate the total landed costs for international shipments, including duties, customs fees and taxes so there are no surprises along the path to delivery.
Succeeding in today’s uncertain marketplace can be can be as simple as finding the right support.
The state of global trade may be in flux, but the future looks bright. According to the World Trade Organization, global trade is on track to grow by 2.4 percent this year and between 2.1 and 4 percent next year. And, according to Mickey Levy, chief US and Asia economist at Berenberg Capital Markets, international trade volumes will continue to expand, despite global trade barriers.
Just because the market is in flux doesn’t mean your company’s business opportunities should be. There’s a world of opportunity waiting.
This article first appeared as sponsored content on The Wall Street Journal Logistics Report and was republished with permission.
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