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The pandemic has made global supply chain issues a common dinner table topic. Now, with geopolitical tensions rising, Competing manufacturing locations In China, India, and Mexico, it can be difficult for businesses to understand what the best strategy is to move goods internationally.
However, despite the complexities affecting global supply chains, there are more opportunities than ever for businesses to engage in international trade. Advances in technology are making it easier and easier to automate logistics. actual, By Acumen Research and Consultingthe global logistics automation market is predicted to reach $133 billion by 2030.
Technology not only makes it easier for companies to manage supply chain logistics, but also allows businesses to negotiate better deals with overseas suppliers, find new customers, and adapt to future market conditions in a depressed market. There may be opportunities to build models.
Regardless of your motivation, if you’re a company looking to expand internationally, here are three tips to give you a competitive edge.
1. Understand regulatory requirements in advance
Paperwork may seem like a hassle, but in the world of global logistics, inaccurate or incomplete forms can make or break a package’s ability to cross borders. As leaders in the customs brokerage and freight forwarding industry, we can tell you that customs brokers spend a disproportionate amount of time following up with their customers and preparing the proper documentation to clear customs.
Understanding simple but important details, such as what determines a product’s country of origin, can help with budgeting and planning. For example, if a company purchases materials from China and further develops them in the United States before reselling them, many leaders assume that they qualify for tariff reductions through the North American Free Trade Agreement (now known as the Free Trade Agreement). Canada-U.S.-Mexico Agreement) — but that’s not always the case. To take advantage of lower tariff rates, your product must meet certain criteria. Overlooking such details can cost your company a lot of money, unexpectedly.
It is also important to understand how exchange rates are calculated. Many businesses are surprised when their shipment arrives and find out they have to pay more in customs duties than originally estimated. That’s because customs duties are calculated based on the exchange rate at the time the goods arrive at their destination. Exchange rates fluctuate, so it’s important for businesses to keep this in mind when creating their budgets.
Related: Customers don’t care where your e-commerce business is based, so be prepared to ship anywhere in the world
Consider geopolitical tensions and changing market conditions
From China, recently delivered.”retaliatory tariffs“In response to attacks on merchant ships. Red SeaRising geopolitical tensions are forcing companies to rethink trade routes.
How companies navigate geopolitical turmoil depends largely on whether they seek a short-term or long-term strategy. For example, if a company is seeking a short-term strategy, it may be able to adapt more quickly to trade route disruptions. However, companies focused on long-term logistics planning must take into account the bigger-picture effects of geopolitical stability.
For example, the current tensions between the US and China are causing more manufacturers to set up factories. Business in Mexico. If the United States decides to permanently shift its purchasing from China to Mexico, this change will have a significant impact on prices and production capacity along the trade route in the long run.
Companies entering international markets should consider which parts of their supply chains may be disrupted within their target timeframe and whether they are well-positioned to pivot if necessary.
Related: How to find international customers and partners as you expand your market
Building strong relationships with international partners
One of the most overlooked aspects of global logistics is the importance of building strong relationships with overseas partners. Companies seeking strong international partnerships must learn and adapt to the customs and cultures of the regions in which they operate.
In my work, we do business with partners in several countries. Every year, when I attend their annual conferences, I notice the difference between leaders who respect local customs and those who operate as if they were back home. Often, this difference in attitude determines which of us will establish a long-term collaborative partnership that leads to better pricing and referrals, and which of us will lose business altogether.
According to the International Labor Union, an astonishing 70% of international ventures fail due to cultural differences. Every culture has its own etiquette. Doing a little research about the rules of communication and accepted behavior in the country in which you operate can go a long way in establishing a collaborative partnership.
As an experienced leader in international logistics, I have seen firsthand the transformative power of adapting to global market dynamics. For companies expanding into international terrain, understanding the regulatory landscape, geopolitical changes, and cultural nuances can help not only reduce the risks of expansion but also maximize opportunities .