After experiencing a slight decline in 2020 due to the global pandemic, global trade has made a strong comeback in 2021. Driven by a strong recovery in demand due to the easing of pandemic-related restrictions, stimulus packages economic and rising commodity prices, global trade jumped 23% to $28 trillion in 2021, surpassing 2019’s pre-pandemic total of nearly $3 trillion, according to the United Nations Conference on Trade and Development (UNCTAD).
In the third quarter of 2021 alone, world merchandise trade set a new all-time high by reaching $5.6 trillion, reports UNCTAD. And while the global shortage of semiconductors, supply chain disruptions and various geopolitical factors may create a more uncertain environment in 2022, consumer demand for the products does not appear to be abating.
It’s music to the ears of shippers who continue to think beyond their national borders when sourcing and selling goods. Whether exporting, importing, or both, these businesses need systems that can help them comply with complex trade regulations, navigate the changing pricing environment, and facilitate the flow of information, goods, and business. silver through vast international supply chains.
Businesses also need solutions that support any relocation or outreach activities they have planned or already have underway. A company that relied heavily on Chinese sourcing before the pandemic, for example, can diversify that sourcing strategy to include more US-based partners (reshoring) or those based in countries like Mexico and Brazil. (near-shoring).
“It’s not business as usual right now. Business operations have been disrupted and as a result they have had to change the way they do things for the past 10 years or more,” says Bill BrooksVice President, North American Transportation Portfolio at Capgemini. “As they strive to become more agile, flexible and ultimately more profitable, these companies are increasingly turning to software for help.”
Streamlining and automating key processes
Global Trade Management (GTM) platforms have long been considered the solution of choice for companies doing business overseas. Over the past two years, these platform makers have retreated and strengthened their positions as the global trading environment has become increasingly complex and confusing.
By streamlining and automating processes associated with customs and regulatory compliance, global logistics and trade finance, their GTM platforms facilitate the flow of information, money, goods between buyers, sellers and intermediaries. (including customs agencies), banks and freight forwarders.
GTM Market With Different Purposes So It Is Likely
that a single solution may not be enough to
cover all these requirements.
— Oscar Sanchez Duran, Gartner Supply Chain
Of course, with every new problem comes a new opportunity. In that regard, Brooks says he sees more GTM vendors stepping in to help companies navigate the complexities of global commerce.
By integrating artificial intelligence (AI), machine learning (ML) and other advanced technologies into their GTM platforms, for example, software developers are helping companies be more predictive about their global business activities, better understand the changing environment and move away from using spreadsheets. , emails and phone calls to orchestrate transactions and agreements between their business partners.
“Businesses need tools to help them analyze free trade opportunities, tariffs, new treaties and other variables in the global trading environment,” says Brooks. “In response, GTM vendors are realizing that if they made this change or modification to their software, they could help customers eliminate manual sequences from the process, analyze different
scenarios and get answers faster.
These and other GTM features help businesses meet the demands of global commerce in a faster, safer, and more compliant way than they ever could using manual approaches.
Optimization of key processes
By supporting the complex and unique logistical, regulatory and financial aspects of the import and export processes associated with international trade, GTM helps companies orchestrate transactions between many different involved parties.
These parties include, but are not limited to, freight forwarders, customs brokers, government agencies, attorneys, banks, insurance companies, consultants, customers, and suppliers.
Looking around the global trade management space right now, Oscar Sanchez DuranSenior Principal Research Analyst for Gartner Supply Chain, indicates that the two main objectives are the optimization of processes and the use of greater automation. By 2023, he expects at least 50% of major global enterprises to use ML-enabled GTM platforms.
“The inclusion of technologies such as AI and ML in GTM solutions provides better analytics insights and further enhances the automation capabilities of these solutions,” adds Sanchez Duran.
According to Sanchez Duran, AI and ML in GTM can help in many different areas. For example, he says ML is commonly used to more accurately calculate the estimated time of arrival (ETA) of a shipment. The platforms constantly receive data from multiple sources (carriers, ports, satellite, weather, etc.). Once cleaned, reviewed, and compared to historical data, this data helps companies build better prediction models.
Artificial intelligence and machine learning are also used in global trade management to reduce false positives and compliance risks during restricted party screening activities. The software handles this by filling in missing data in files or reducing the time spent on the product classification process.
To fill these and other ‘gaps’, the software uses natural language processing (NLP) to guide the end user in matching product definitions to a specific Harmonized System (HS) code. Commonly used throughout the process of exporting goods, these codes use a numerical method of classifying traded goods and are used by customs authorities around the world.
Sanchez Duran says he also sees an increased emphasis on business networking in the global business environment, where software companies like Bamboo Rose, E2open, Descartes, Infor and others are coming up with new ways to engage as many of stakeholders in the process.
This is a broader trend happening right now in both software industries, where trends like remote working are forcing companies to bring more people, processes, and technology together on shared or integrated networks. .
“[GTM] vendors offer to connect all the different stakeholders,” says Sanchez Duran, “and streamline communication as well as improve collaboration between different parties.
Break down the silos
With the pace of change and disruptive events in global commerce highlighting the need for technology that helps shippers increase resilience, agility and compliance in supply chain operations, companies are turning to their software vendors for assistance.
On the GTM front, Sanchez Duran says the biggest demands are for all-in-one solutions that allow organizations to digitize their operations, easily share information between internal and external stakeholders, and automate highly manual processes. which may be subject to human error. .
Shippers also need help dealing with the complexities of global trade that require a high level and/or high level of attention or analysis, such as product classifications, simulation of landed costs, valuation of Free Trade Agreement (FTA), documentation and requirements management.
According to Sanchez Duran, vendors are responding to these demands by offering products in platform form, allowing companies to select the modules they need while maintaining integration between components. In other words, companies can choose some or all of the offered modules and still be able to take advantage of good connectivity between the chosen components.
To help shippers better manage their global business operations, vendors are building extensive configuration options into their solutions, Sanchez Duran says, along with features like rules engines — and the already mentioned AI and ML — to help improve the automation capabilities of their solutions.
GTM vendors also partner with or acquire other vendors to provide complementary and expanded capabilities to their own customers. Despite these actions, Sanchez Duran said in a 2021 report that the GTM software market remains fragmented, a point of frustration for some software users. “The integration of disjointed applications that support siled processes,” he points out, “is often one of the biggest complaints from GTM end users.”
Looking ahead, Sanchez Duran sees blockchain technology playing an increasing role in global commerce in the near future. While not currently a trend or even a business demand, he says blockchain “should bring additional capabilities to digitize processes related to the use of international documents.”
To companies buying a new GTM in 2022, Sanchez Duran says it’s very important to know your scope, requirements and priorities before exploring the option. With this information in hand, you can ensure a better vendor evaluation process and more easily distinguish the best candidates from those whose solutions may not meet your organization’s needs.
Sanchez Duran also cautions that there may not be a “one size fits all” answer to your business requirements. “There are many types of solutions in the GTM market with different purposes, so it’s likely that one solution won’t be enough to cover all of these requirements,” he continues. “Additionally, it is important to use a proper RFP process to evaluate vendors and understand their capabilities rather than defaulting to a vendor based on name or [existing] love relationship.”