In our cover story on transborder trade this month, features editor Julia Kuzeljevich reports that the smooth flow of trade across efficient borders is still not within reach.
Things may seem better at the border but it’s just the slower economy creating the mirage of more efficient crossings. Shippers, in return for their investment in ‘trusted trader’ programs, want still more transparency, realism and consistency in preclearance reporting.
That almost 8 year after the events of September 11, 2001 we should still be talking about the need for greater transparency and efficiency at the border is, frankly, very puzzling. Especially when you consider the importance of transborder trade to both Canada and the US, and the money and human resources the governments on both sides of the border have put in while trying to create a secure and efficient border.
But then again the border security issue is just one of many puzzling things when it comes to transborder and global trade.
Shippers are right to demand more from their border services agencies. But the transparency, realism and consistency should not stop there. Shippers also need to have a long look in the mirror when it comes to both their transborder and global trade strategies and freight movements.
Consider what can only be called our over reliance on the US market. True, any Canadian exporter would be crazy to ignore such a huge market right on our doorstep. But Uncle Sam is sick and not about to get much better within the rest of the year. Yet a study of Canada’s small and medium enterprises (SMEs) recently conducted for UPS found that 65% of them intend to target the shrinking US market this year, compared to just 19% who have plans to market their products to Asia’s new middle class. This despite the fact 55% of Canadian SMEs believe trade with the US won’t rebound till 2010. In other words, they’re basically willing to sit out the year.
Just as puzzling is the decision to ignore the largest market in the world when every new customer should be considered a blessing. While the US has a consumer market of over 300 million people, India and China have well over two billion combined.
The same study also found that a majority of Canada’s SMEs would prefer to see trade barriers remain in place, even though 60% of importers and 66% of exporters actually consider global trade as beneficial. Very puzzling indeed.
I’m also puzzled by the decisions of many companies that do take advantage of global trade opportunities. In my Viewpoint column last month I wrote about the glaring weakness in our approach to global trade: vulnerability to supply chain disruptions. An Aberdeen Group survey conducted a couple of years ago of more than 100 companies involved in global trade found that on average companies had 10 supply chain disruptions over the previous 5-year period. Most puzzling was that many companies were doing very little or nothing to address this obvious shortcoming. Another UPS study found that 1 in 10 companies did not monitor suppliers for anything. About half of the remainder looked only at immediate suppliers. And in nearly half of the companies surveyed, formal risk assessment took place only annually.
Finally, it never ceases to amaze me that, despite technology’s well proven ability to streamline paper intensive processes, how many companies still manually handle their transborder and global procurement of freight services. I can only imagine how difficult it must be to track multiple carriers in multiple countries with varying tariff schedules and currencies. I can only imagine the degree of inaccurate service rates and duplicate invoices the reliance on outdated manual tracking processes must create every month.
As a white paper by JP Morgan I recently read pointed out, without electronic processes, freight procurement errors and problems can only be caught after they occur. And such problems continue to recur until they are identified, with lag time running into weeks and the overpayment of duplicate invoices adding up to thousands of dollars. The situation becomes particularly challenging when companies are dealing with financial systems and processes that automatically pay “expected” or “anticipated” invoices.
Again, a very puzzling way to do business.
WORTH REPEATING
“If you don’t toot your own horn, there will be no music,”
Andrew Miller,
president, ACM Consulting Inc.
