By Mike Kolman, Marketing Programs Manager, Oracle
As exciting as it sounds for any frequent flyer not having to deal with waiting lines and crowds at the airport, the reality behind this phenomenon that has kept the world glued to their homes has been far more upsetting. For professionals working in global trade compliance, volatile consumer demands and widely distributed supplier networks have already caused plenty of headaches in the last few years, the added bonus of a global pandemic has not made it any easier.
While the pandemic has dominated the previous year, 2021 looks to be bringing new trade compliance challenges, as well. Whether it will be a new free-trade agreement rising in the Asia-Pacific, Brexit finally becoming a reality in Europe or increased disruptions in an already choppy trans-Pacific trade lane, global trade complexity continues to increase. These complexities can add to your logistics costs, whether through delayed or expedited shipments, new tariffs, or potentially even penalties being incurred for incorrect trade documentation or processes. But before we look into possible ways of addressing such complexities, let’s take a look at the year ahead.
The trans-Pacific trade lane is one of the most important global connections in terms of freight. Over the past few years this route has seen increases in volatility and disruption. Protectionist policies and the ping-pong style back-and-forth of tariffs between the United States and China caused a massive spike in ocean rates. All the while a sharp drop in outbound air cargo because of Covid-19 has made ocean and air rates skyrocket even more to previously unseen heights. The upcoming year will be a time of balancing the normalization of freight costs and increases in non-pandemic related volatility.
In November 2020, fifteen nations – including all ten members of ASEAN – signed the Regional Comprehensive Economic Partnership (RCEP). The RCEP rationalizes and standardizes many bilateral Free Trade Agreements into a common framework with principles designed to facilitate foreign direct investment and relatively light country-of-origin rules. The ratification of the RCEP could further the developments in European – Asian trade, but countries such as India and the United States will attempt to shore up their relationships with their own regional partners, causing additional complexities because of overlapping free trade agreements – almost like a highly complicated compliance Venn diagram.
If you’re anything like me, you must have been somewhat surprised by the United Kingdom’s decision to proceed with Brexit. Fast forward five years and only just now a deal has been reached. The perpetuating uncertainty with regards to future rules and regulations is emphasizing the need for exporters to stay on their toes and be nimble across their global trade processes. Global trade compliance and the ability to avoid additional logistics costs and tariffs will play a crucial role in determining which supply chains can remain competitive. Deal or no deal on the table, customs compliance practices between the European Union and the UK are likely to change drastically in 2021.
We can all agree that global trade will become more complex soon, but supply chain outperformance is still a possibility. The stakes may be higher than ever before. Technology will play an increasingly more important role in the ability to remain competitive, and organizations to navigate such increasing complexities and pivot without delay.
To make informed trade-related decisions, and navigate your global trade operations around the challenges of 2021, it is important to have cross-functional visibility and internal trade controls. It is also critical to be able to rapidly adapt to changing business environments and accurately estimate trade-related costs.
By adopting a global trade management solution that easily integrates with your logistics network and business processes, you can achieve the best trade practices and avoid costly delays and exposure to unnecessary risk. Efficiently screen for restricted parties, accurately estimate total landed cost, capture duty savings, and manage customs documentation, all while reducing the risk of non-compliance. Our customers centrally manage and automate global trade operations, enabling easy monitoring of cross-border transactions whilst mitigating financial and operational risk.