As international trade volumes continue to hit records every year, shippers of all sizes are turning to applications to gain visibility and control of their global trade processes and GTM vendors are there to answer the call.
Global trade hit a record $32 trillion for 2022, up from its previous record-high of $28.5 trillion in 2021. According to UNCTAD’s latest , even the war in Ukraine and the lingering impacts of the pandemic couldn’t throttle strong growth in the trade of both goods and services last year. Trade in goods grew 10% from 2021 to an estimated $25 trillion for 2022, due in part to higher energy prices, while international trade in services rose 15% to a record $7 trillion.
In the meantime, new trade agreements, fewer ocean shipping snarls and a reduction in ocean freight rates may have all helped buoy global trade last year. For example, UNCTAD says the Regional Comprehensive Economic Partnership and the African Continental Free Trade Area both helped to “improve logistics” in 2022.
“Ports and shipping companies have now adjusted to the challenges brought on by the COVID-19 pandemic,” UNCTAD adds. “Freight and cargo rates are still higher than the pre-pandemic averages, but the trend is downward.”
As global trade volumes continue to climb year-over-year, a growing number of shippers are dipping a toe in international waters. What many quickly find is that doing business with overseas customers and suppliers is a lot different than transacting business within your own borders. Knowing this, global trade management (GTM) software providers are regularly honing and improving their platforms to meet the needs of today’s international shippers.
The platforms manage the logistical, regulatory and financial aspects of the import and export processes associated with international trade, and often for multiple modes of transportation. According to Oscar Sanchez Duran, senior principal research analyst for Gartner Supply Chain, GTM has become more important than ever as world events impacting supply chains are occurring with more frequency.
“There are different drivers for an increased adoption of GTM technology,” said Sanchez Duran. “For example, with the Russian invasion of Ukraine at the beginning of 2022 and the subsequent sanctions established by the different countries, many organizations had to review their current process to check if they were remaining in compliance.”
This event pushed some organizations to seek technology to automate or at least have better control of their denied party screening (DPS) process to avoid incurring any sanctions. A due diligence review of a company’s internal lists, the DPS process ensures transactions don’t involve any companies on a sanctioned, watch or concern list, or that are operating in a country that has been sanctioned or embargoed.
According to Sanchez Duran, the implementation of new regulations such as the U.S. Uyghur Forced Labor Prevention Act and the German Due Diligence Act will probably further accelerate the need for global trade management compliance—mainly because these and other laws require organizations to “know” their suppliers and business partners.
Along with the “low maturity” firms that may have been managing global trade compliance manually in the past, interest in GTM is also coming from “higher maturity” organizations that want to improve their global trade functions. In 2022, for example, the latter were mostly seeking technology to optimize costs, make better use of free trade agreements, calculate landed costs and otherwise save costs related to global trade.
Other companies were regionalizing their supply chains and reevaluating the rules of origin with regards to costs, legal requirements and the other complexities of exporting or importing products from a new location or supplier. This repositioning of production and sourcing is expected to continue in 2023.
According to Bloomberg’s transcripts of U.S. companies’ earnings calls and presentations, onshoring buzzwords were thrown around more often than ever in 2022. And according to a UBS survey of C-suite executives, 90% of respondents said their company was either in the process of or considering moving production out of China, with around 80% saying they were considering bringing some production back to the United States.
Source : logisticsmgmt.com/ For More Details