The growth of Gross Domestic Product (GDP) in emerging markets is far outpacing the U.S. and other developed countries. Business leaders see the demand building in these burgeoning economies, and that tapping into that demand via international expansion is an important way to achieve top-line revenue growth. But leaders also see the risks inherent in global trade. Or, perhaps, more to the point, they’re concerned about what they cannot see when trading borders expand beyond their comfort zone.
“There are steps you can take to help limit your risks,” says Dave Zamsky, vice president of marketing and business intelligence at UPS Capital. “Business leaders are often surprised to learn that not all of those steps require buying a specific service or solution.” Here are three strategies businesses can employ to help make their international expansion run a little more smoothly.
Few supply chain partners are more essential to global trade discussions than logistics providers. That’s why businesses looking at international expansion should take care to choose the right partner. When bringing people to the table, businesses should consider capabilities such as the makeup and reach of their industrial shipping networks, their expertise in global trade, and even the technology they offer to help make worldwide shipping more automated for employees.
“Especially if the goods in your supply chain cross borders in different phases of completion and in different shipping modes, think about how integrated the provider’s network is,” says Greg Maddaleni, director of UPS Customs Brokerage marketing at UPS. “Do they know how to efficiently move your goods across borders in any phase of completion? Can you keep sight of a shipment once it switches from an air freight carrier to a road freight carrier?” He adds, “Of course you want cost-efficient transportation, but think first about the visibility you might lose if your shipments are hop-scotching among carriers. Cost should be just one of many factors to balance.”
There are also industry-specific needs to consider, especially among companies operating in heavily-regulated industries with stringent quality and worldwide shipping requirements. For manufacturing or construction industry shipments, for example, a provider should have a global trade infrastructure and a team skilled in quality assurance and knowledgeable of worldwide shipping or storage of certain products. Having on-the-ground help from people who understand the complexities in each country and market can help reduce the risk of delay.
By the same token, companies whose industrial cargo is likely to include high-value goods should look for GPS tracking solutions to help safeguard that their worldwide shipping network hits specific checkpoints.
After selecting a logistics provider, businesses need to think about some of the challenges that global trade can pose. A very realistic concern may prevent some companies from international expansion: risk of non-payment. Whether the risks are caused by customers defaulting on payments or from financial losses due to goods lost in-transit, a number of risk mitigation solutions can help companies trade more confidently across borders.
UPS’s Zamsky describes in broad terms some of the biggest challenges. “Selling and shipping internationally means vetting new customers, navigating currencies and languages and learning banking policies in foreign lands. But even the most thorough due diligence is bound to leave at least some vulnerability.”
He singles out solutions such as Trade Credit Protection which can help protect companies from bad debt losses and can position their receivables as collateral with banks and other lenders. Flexible Parcel Insurance and customizable Cargo Insurance help protect goods during industrial shipping above and beyond carrier liability coverage.
“Most companies will need international trade to grow in meaningful ways, " says Zamsky, “so they should know there are ways to help protect their cash flow and profitability at the same time.”
Of course, risk of non-payment isn’t the only thing that companies pursuing global trade need to worry about. Businesses face another dimension of risk when the products they sell or distribute must be stored near the point of demand: investment in physical infrastructure.
With ever-changing regulations around customs clearance, this is a major problem for industrial shipping. Some providers offer customs brokerage services that can help you navigate the paperwork, helping you expand internationally.
Dan Gagnon, vice president of global healthcare strategy and marketing at UPS, suggests that companies testing the waters of business expansion into global markets should consider leveraging a third-party provider’s existing physical infrastructure. He says, “A small number of providers like UPS have built global warehousing and distribution networks that can help companies in any number of industries scale up to take advantage of growth opportunities.”
Gagnon touches on the specialized facilities and expertise needed to support industrial shipping customers. “I can’t stress enough the enormous value a third-party can bring to even the most preliminary discussions of global sales growth.” He adds, “Everyone wants to capitalize on opportunities quickly before their competition can get a foothold. What better way to help reduce risk out of the gate than with an experienced provider who’s already on the ground in the markets you want to reach?”
The rewards of international expansion can be enormous, but so are the potential pitfalls. A logistics provider with risk mitigation solutions can help your business navigate these complex, everchanging markets.
Learn more about the ways UPS can help you cross borders with confidence.
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