Supply chains are running at full steam as the economy is booming in parts of the world, while in other parts of the world, economies are taking a hit from obstacles that hinder open commerce and trade. Protectionist trade policies are leading companies to shift their country sourcing practices as well as investments in automation and technology to help keep goods moving and visible. Moreover, there is no reason to believe that in the coming months we will see geopolitical posturing along the trade front fade. The issues of labor and transportation costs, along with capacity, will beleaguer everyone from the supply chain manager to the CFO. Through it all, the consumer will be the proverbial tail wagging the dog.
The new normal in global trade policy is a stormy environment that is highly unpredictable, and supply chain managers need to put proactive measures in place to keep supply chains safe or become a casualty.
Almost every major economy is building a “trade wall” along its borders – including the US, EU, UK, and China. Concerns about the appropriate balance of trading between nations, consumer and environmental safety, protecting against terrorism and, of course, generating revenue is at the root of volumes of legal documentation and a corps of agents at points all over the world enforcing them. Trade policies all around the globe are on in flux.
Tariff discourse has evolved into policy changes, non-tariff actions are increasing too, and the number of new trade agreements has risen to record levels. In this fluid environment, it can be challenging to pinpoint trends and assess how trade policy shifts might impact your business and products.
While new policies are implemented, shippers and manufacturers all over the world are scrambling to reconfigure their supply chains both physically and financially by finding new suppliers, alternate production sources, and lower-risk markets to sell their goods.
Amidst the breakdown in US-China trade relations and the ongoing trade war, the rest of the world is scrambling to make trade moves that will insulate them amidst the uncertainty. The United Kingdom is racing to strike deals with the US, China, and other Asian countries, and EU nations to shelter their economy during the impending Brexit, whose deadline has been pushed to late 2019.
This trade volatility and disruption affects every company and every industry – and often not for the better. The fact is, global trade volatility can carry a hefty price tag. It can drive up the cost of raw materials, manufacturing, transportation, duties, and tariffs, and ultimately increase the prices paid by consumers. For instance, US and foreign automotive manufacturers alike have increased consumer prices to compensate for the higher tariffs levied by the United States or by China’s retaliatory tariffs. Analysts caution this scenario will potentially reduce sales and force worker layoffs. China’s production numbers are dropping, and factory activity in both the US and China are slower than expected.
Are you tuned-in?
It is critical to be tuned in to the geopolitical changes that are impacting the direction of global trade and the implementation of punitive and retaliatory tariffs. Companies should consider how to react to these developments and brace for more changes that might come down the road. To stay ahead, you need up-to-date trade knowledge to pinpoint the new changes coupled with a digital supply chain execution platform to ensure goods cross borders efficiently.
With the upheaval of trade policies around the globe, companies continue to look to foreign markets as a means to grow top-line revenues, avoid increased duties and tariffs or take advantage of trade agreements. All this means your goods are crossing more borders. Unfortunately, shipping to customers in more countries complicates the export/import compliance challenges and increases regulatory risk. Many shippers struggle to accurately determine duty/tax costs, effectively screen potential customers against restricted party lists, determine license requirements, perform compliance checks, and generate international trade documents.
To efficiently import or export goods, shippers need fast access to data for all the countries where they trade. Unfortunately, collecting, cleansing, and publishing trade content is complicated by the number of countries and government agencies, differences in trade regimes, a wide variety of formats, and rapidly-changing information. Trying to maintain an accurate database can be time- consuming and costly.
What does it take to weather a turbulent and stormy trade environment?
The value of rich trade content that seamlessly integrates with digital, automated import/export solutions is the key. By combining content with a platform for global trade execution, companies can realize productivity gains of streamlining the trade compliance side of their operations.
Trade content needs to include, at a minimum, these data elements:
- Restricted party lists, including denied entities, politically exposed persons, and embargoed/sanctioned countries; there are over 600 published worldwide
- Supplemental denied party lists like the Sanctions Ownership Research (SOR) or ’50 % Rule’ List, Adverse Media Entity List, and State-Owned Companies (SOC) List
- Binding rulings on product classifications for export and import determination
- Access to tariffs along with Section and Chapter Notes, General Rules of Interpretation, Footnotes, and appendices to facilitate classification for customs purposes
- Import and export controls, including license requirements, document requirements and taxes, duties, fees, quotas and surcharges imposed by each country supported by Amber Road
- Terms, coverage, and rules of origin for Free Trade Agreements and other preferential programs
- Control lists for restricted goods, licensable items and munitions
It isn’t easy to maintain this level of data though. Top providers have a staff of in-house trade experts around the world who gather, translate, interpret, and update country-specific trade regulations. Having such a robust trade content database integrated with a global trade management solution enables shippers to manage all aspects of trade compliance.
Don’t Just Hunker Down, Keep Moving
Supply chain storms aren’t going away, and as you seek solutions to shelter your company from uncertainty, grow into new regions, or try to maintain your existing base, you need to equip your supply chain team with the right gear. Successful companies worldwide are leveraging a global trade management solution, coupled with dynamic global trade content, to keep moving in a stormy environment.
Gary Barraco, Director of Global Product Marketing, is responsible for developing strategic product marketing direction and presenting the Amber Road brand and solutions worldwide. As the platform evangelist, Gary develops and launches customer insights, go-to-market plans, product messaging and content, and field marketing tactics which establish Amber Road’s solutions as a standard in the Global Trade Management space. Previously, Gary was VP, Industry Development for ecVision for 9 years prior to its acquisition by Amber Road. He has 20 years of active military service where his primary specialty was providing marketing support to Army National Guard recruiting and retention operations in New Jersey. Gary received a BS from the State University of New York and is currently pursuing a Master’s degree at Moravian College.