Economic uncertainty has shaken business confidence, but it also offers an advantage to firms that harness new tech when trading across borders, writes Geoff Taylor, MD of AEB (International)
The International Monetary Fund, the World Bank, the International Grains Council and investment banks Barclays and Goldman Sachs all agree on the outlook for trade in 2019: it’s not good.
Protectionism, including the recent trade wars between US and China; rising manufacturing costs; continuing uncertainty surrounding Brexit; and global supply disruptions have all contributed to their forecasts.
While the consensus may seem gloomy, it also highlights the potential for British firms in all sectors to make improvements in a crucial area. They urgently need to modernise their cross-border supply chains so that they can better accommodate trends in global trade and generate value.
Global trade encompasses a complex thicket of national and international authorities and government bodies, an abundance of customs procedures, export control laws, bans and restrictions, and an elaborate array of regulatory IT system networks.
As the pace of change in this complex ecosystem increases, cross-border supply chains need to adapt faster than ever.
The foundation for flexible supply chains with integrated global trade and customs management lies in powerful IT landscapes and systems that automate and standardise across country-specific processes and regulations.
This not only ensures operational efficiency; it also delivers value via a holistic view of options for international procurement or distribution in global markets.
Transport costs, duties and taxes, and fees for services such as brokerage, transhipment, quality assurance, licensing or localisation requirements are all relevant here.
Survival in today’s fast-paced markets relies on efficient cross-border supply chains. Businesses looking to stay in the race need to modernise their global trade systems.
Customs management in particular is a neglected area when it comes to digitisation, so there is tremendous potential here.
Generating transactional savings, realising economic benefits, ensuring customs compliance and avoiding supply-chain disruptions via global trade IT systems also applies to businesses working with service providers in customs management and export controls.
Integrated communications between IT systems in supply chains is a prerequisite for success – and this includes global trade. Outsourcing customs processes otherwise only creates more work through redundant actions and potential communication errors, resulting in higher total costs of ownership.
A company’s ability to ensure full data consistency and transparency across local and global supply chains is vital. But, in reality, global trade set-ups often have a scattered landscape of service providers, master databases, automated/manual processes and software solutions, making large parts of global trade operations opaque.
This prevents supply chains from handling global trade risks and opportunities – for instance, reacting to new tariffs – quickly enough.
Modernising and tapping into the potential of global trade and customs management delivers excellent returns on investment and advances the digital agenda. It also enables both operations and business leaders to breathe more easily in these turbulent times.