Keys to trading success
Boom not gloom

Keys to trading success

Despite some dour forecasts, our leading global trade experts give you their best advice on how to turn 2019 into a solid year for your company no matter where your cargo lands.

According to a recent report from McKinsey & Co., the international consulting firm based in New York, the outlook for global trade this year is anything but good.

Respondents to its survey say conditions in their home economies became gloomier throughout 2018, and most believe they are now more likely to say conditions in their countries have declined than to say they have improved.

Moreover, the International Monetary Fund, the International Grains Council, the World Bank, the World Economic Outlook, and U.K.-based investment bank Barclays and New York investment bank Goldman Sachs all have said in the past week that things aren't looking good for trade in 2019.

Add to that the ongoing trade war between the US and China, Brexit uncertainty, increased protectionism in the west, rising manufacturing costs, shrinking margins, and supply disruptions - all credited, in one form or another, with contributing to a global trade slow down.

So how in such a difficult environment can a company succeed in global trade? We asked some of our top experts to give you their best advice on ensuring you see more boom than gloom. Here are their responses:

Markus Meissner, Managing Director at AEB

Businesses need to make their international supply chains more flexible, with the ability to implement regular adjustments and changes with little effort and with consistent quality and security-levels. In a truly adaptive supply chain, companies can more easily replace their upstream suppliers, adapt to new sales markets faster, and continuously optimize the structure of their flow of goods with new service providers and changing routes.

Prerequisites for this are IT systems that address international networks, standardize across country-specific processes and regulations, and create the necessary transparency to ensure the right decisions and a holistic view. Extensive transparency on options for international procurement or distribution in global markets includes transport costs, duties and taxes, but also fees for other services such as brokerage, transshipment, quality assurance, licenses, localization, etc. In addition to the direct cost aspects, however, legal action, quality, risk and capacity factors must be taken into account as well. These days in global trade, a clear differentiation just by product features becomes more and more difficult, so intelligent and adaptive supply chains are a central competitive factor.

Ingo Strasser, General Manager for Switzerland at AEB

You need a deep knowledge about your own global trade processes in combination with the awareness for the legal framework - local and global. Two quick wins in 2019 would be taking advantage of customs procedures with economic impact and preventing illegalities and image loss with an active global risk management system.

That is best described as a top-level, integrated, in-house, data-management system to control your global trade processes and manage your internal monitoring systems. The result would be high standardization of your trading processes, the possibility for an active optimization of your supply chain by Intelligent Data Management, and an ability to prevent illegalities and image loss with data consistency.

I think in 2019, success in global trade is very possible but it will depend on several factors, chief among them will be your company’s ability to ensure full data consistency and transparency across your local and global supply chains.

Dr. Torsten Mallée, Director International Business Development at AEB

The one most important thing to me is central transparency. Today’s global trade setups most often suffer from a scattered landscape of service providers, master databases, automated/manual processes and software solutions. This makes great parts of global trade operations opaque and it is almost impossible to identify issues before they become pressing.

Potentials for cost savings, faster execution, better compliance, frictionless processes and improved customer satisfaction can only be tapped, and respective measures be prioritized, when having a holistic visibility on operations. This visibility requires digitizing and, to best possible extent, standardizing global trade processes and hence harmonizing the above-mentioned global trade landscape.

Mark Brannan, AEB’s International Business Development Director

A good example of how to be a success is undoubtedly Brexit planning. What would a hard border between the UK and the EU mean for your business? As customs declarations would be required, do you have the right staff and software to make declarations for UK imports and exports? Or, would you outsource this to a broker or freight forwarder? Do they have the capacity cope? What impact would a hard border have on your customs duty liability? Would it make sense to source elsewhere? If you’ve thought through the potential scenarios ahead of time and put contingency planning in place, it’s much easier to react once change happens.

It’s also important to have software solutions in place that support flexibility. If you need to change customs broker or the carrier due to a change in supply chain operations, you need to be able to do this quickly and easily. This means that lengthy integration projects are not desirable. You should be able to change with the minimum fuss and effort. The right software solutions support this switching quickly and easily.

Lastly, delays and other supply chain disruptions can get expensive. A real-time overview of the status of each step in your supply chain processes is therefore essential. Your logistics planners can then respond immediately by taking countermeasures to mitigate the disruption before it becomes a problem.

Frans Kok, General Manager of AEB Asia Pacific

To be successful in this market you’ll need to target your potential customers with a good online presence and support it with a good supply chain solution. That means to be able to grow or sustain your business on an international level you need to create an awareness in the markets where you want to sell your products. With or without a physical presence in the market, an online presence will support your sales and lead to awareness and a demand for your products. Also, you need to make sure your customer receives your products and to assure customer satisfaction a good supply chain solution is needed. The two main components for this supply chain is a partner that will move the goods from A to B and a system that allows you to execute the supply chain process, takes care of customs and compliance regulations and measures performance.

Ted Roth, General Manager AEB Sweden

For me it is being able and flexible enough to handle risk and opportunities within short lead time: such as Brexit, trade embargoes, new trade agreements, new trade lanes and on-boarding of new partners without removing all focus from daily operations. I would expect all of those areas to be just as much a part of the business environment in 2019 as they were in 2018 and unless you are ready to respond you will be left behind. Also, there is an absolute need to have a strong customs management solution in place. Our platform for managing your customs processes gives you end-to-end IT integration and smart automation, you accelerate your customs processes and save valuable resources for imports and exports in key EU export economies – and even worldwide - thanks to easy integration of your customs brokers. It’s a solution that will put you in a position to succeed in 2019.

Dr. Ulrich Lison, a member of the Executive Board of AEB and a global trade expert

Currently Global Trade Management has to face the following challenges: high dynamics of change, high complexity, and a lack of expertise. One possible answer to all of these is artificial intelligence, or AI. Companies that succeed in translating the complex foreign trade law into machine language and in reaching a high level of automation in customs execution through AI will be successful. Once again it has become obvious that digitization expertise determines the success of companies.

Dr. Lison authored AEB’s recently released GTM study, a survey of 435 experts in global trade management, which found that:

  • Participants identify export management and controls as one of the most important areas for digitization.
  • More than 35 percent of respondents' companies have already implemented at least one project to digitize customs.
  • And that a lack of expertise and financial resources are the primary obstacles to digitization at many companies.

Richard Groenendijk, General Manager at AEB Netherlands

The key to success will be to ensure you’re in charge of the total cost of ownership, which not only includes transport but also the duties to be paid. That said, you’ll also need to take full advantage of sourcing advantages through Free Trade Agreements or duty suspensions and that means you’ll need a solution in place to help you understand any changes impacting your market. An example of a software solution that can make a difference is our Import and Export Filing platform in combination with Classification and Origin & Preference. Such a combination of functionalities allow you to centrally handle your customs declarations for one – or up to eight countries. You can use Export Filing to transmit your data to the customs authorities in Germany, Sweden, the Netherlands, Belgium, the UK, France, Poland, or Switzerland. It’s one way to make your company both competitive and profitable in 2019.