Global Trade Data (aka “trade content”) is one of the “3Cs” of Global Trade Management, but its value extends well beyond facilitating import and export processes. Defining Global Trade Data, determining which supply chain processes benefit from it, and figuring out how supply chain applications integrate with and use the data aren’t always straightforward.
To get the answers to these and other questions that shippers have around Global Trade Data, Adrian Gonzalez interviewed Ron Lackey, Vice President at Descartes Systems Group, for a recent episode of Talking Logistics and came away with some interesting insights.
When asked about the importance of Global Trade Data and its relationship to import, export, and other business processes, Ron said:
Global Trade Data is primarily for importing and exporting, but even for domestic transactions companies should be checking denied party lists. Years ago GEICO, the car insurance company, was busted for selling insurance to a guy who was on the denied party list. So while Global Trade Data is internationally focused, people do need to understand the rules and regulations before getting involved with these transactions.
With so much buzz today around e-commerce, international shipping has been a historically challenging area for online retailers. I asked Ron to discuss the role of Global Trade Data in e-commerce and to explain the differences between B2B and B2C applications.
This is my favorite part of the industry because it’s very different and changing very quickly. According to a white paper that eBay published, e-sellers experience 60 percent less trade friction than a shipper that is moving containers. The trick is that there are a lot more e-sellers out there – on platforms like eBay or Amazon – that don’t have the same experience as someone who is working at a firm like Hitachi for twenty years. So, in relative terms, there is actually a lot more trade friction for e-sellers because they lack the experience.
There’s also a lot more visibility than there ever was in the past, whether you’re shipping a container or a sweater overseas. Fifteen years ago, you would have an idea when your container was going to hit Long Beach. As long as you knew within a day or two when it was going to come in, it was probably going to be okay. What’s changing are the visibility tools and other kind of tools to track containers around the globe and to gain a clearer picture of where those containers are at any given time. On the e-seller, carrier, and post side, [visibility] is so much better today. For example, you probably get an email on your phone 30 seconds after a package is delivered on your porch.
Now, what’s really interesting is that consumer demands are increasing and consumers don’t only want to know that package will be there Thursday, but they want to know that it will be there Thursday between 3pm and 4pm. That “last mile” is a stringent process that requires a lot of coordination, communication, and data. That’s an exciting and changing part of the industry. However, you can’t make promises to consumers if you never got the product into the country in the first place because you misclassified your product and some customs officer doesn’t like the number you used. It’s all intertwined and if you look down the road a few years, all of this is going to have to become an exact science.
So clearly there are some missed opportunities out there that shippers can take advantage of. Here are a few that Ron pointed out:
If executives and the trade compliance professionals look at themselves as cost centers, then they’re going to be treated as such. At the end of the day there’s so much valuable business information embedded in global trade compliance and data that executives should be paying attention from a business perspective. That includes trade agreements and sourcing (i.e., where to build factories). Unless they do this, not much is going to change.
Ron went on to say that that if left unchecked, trade compliance will continue to be a cost center and will always “lack the funds needed to go out and automate and purchase trade management systems and classification systems.”
So, what questions should companies ask themselves to assess the quality of their Global Trade Data and whether they are leveraging it effectively? Watch the short clip below for Ron’s response.
Please watch the rest of Adrian’s interview with Ron for more information on this very important topic. After watching, please post a comment and tell us what you think. Let us know how your organization is leveraging Global Trade Data.