Global trade is the engine room of economic growth. Yet, managing international trade is easier said than done. Why? More regulations, more technology, and geopolitical instability have created challenges. Understanding these challenges and knowing how to tackle them is key to effective global trade management.
Regulatory Complexity and Compliance Challenges
Regulatory complexity and compliance challenges are arguably the most formidable hurdles facing companies engaged in global trade. Every country has its own regulations for tariffs, taxes, customs, labor laws, and environmental standards. It's a minefield for businesses.
Efforts to meet regulatory compliance standards mean companies are increasingly hit by costly delays and inefficiencies. Plus, with the introduction of new trade laws like the EU’s Corporate Sustainability Due Diligence Directive and Canada's Forced and Child Labour in Supply Chains Act, compliance is becoming more stringent.
These regulations not only hold companies accountable for their supply chain practices but demand greater transparency across their operations.
To combat these challenges, companies are increasingly turning to Global Trade Management (GTM) software. This software automates compliance processes, meaning that businesses stay updated on changing regulations and avoid penalties.
Plus, Global Trade Management software helps to streamline documentation, freeing companies to focus on optimizing their trade strategies instead of getting bogged down by paperwork.
Technological Disruption and Integration
There's no doubt that technology is transforming global trade management, giving businesses new ways to improve efficiency, transparency, and speed. AI, blockchain, and the Internet of Things have become integral to modern supply chain management.
For instance, AI-powered demand forecasting equips businesses to predict trends, optimize inventory, and reduce the risk of stockouts. Blockchain provides secure, transparent transactions, reducing the risk of fraud while streamlining the entire shipping process.
However, the rise of technology across supply chains brings fresh challenges. For example, the rapid pace of innovation has created a significant skills gap in the workforce.
According to the World Economic Forum's Future of Jobs Report 2023, 40% of supply chain professionals cited a lack of technological expertise as a major hurdle in implementing new systems.
Plus, cybersecurity concerns are rising. With more data being shared across digital platforms, businesses are increasingly vulnerable to cyberattacks, which can lead to significant financial and reputational damage.
To tackle these issues, businesses need to invest in continuous upskilling of their workforce and develop a robust cybersecurity strategy. Equally, companies must integrate technologies that complement each other - for example, AI for predictive analytics and blockchain for secure data sharing. This serves to reduce integration issues while improving global trade efficiency.
Geopolitical Instability and Market Uncertainty
Geopolitical instability is a major headache for businesses involved in global trade. Tensions between countries, economic sanctions, and policy changes can all impact the flow of goods, cause unpredictable tariff rates, and create uncertainty across supply chains.
The US-China trade war is one example that has led to billions of dollars in tariffs, which has forced companies to reconfigure their supply chains and relocate manufacturing to other countries.
Remember Brexit? That too has resulted in significant regulatory changes, making it more difficult and costly for businesses to trade between the UK and EU.
Recent data from the International Monetary Fund (IMF) projects that global trade growth will slow to 2.1% in 2024, down from 3.2% in 2023, largely due to ongoing geopolitical tensions and rising inflation.
Plus, the World Bank shows that businesses are feeling the economic strain of conflicts such as the Russia-Ukraine war, which has disrupted key supply chains, particularly in energy and agriculture.
To mitigate geopolitical tensions and market upheaval, businesses must take a proactive approach to global trade management. This includes diversifying supply chains, developing contingency plans, and using GTM software to monitor geopolitical developments in real time.
Meet your global trade goals with Vizion
Global trade is hard, but businesses that build informed, flexible, technology-driven strategies can face the challenges posed by regulatory complexities, technological disruption, and geopolitical instability, minimizing their impact.
Vizion's TradeView SaaS platform, in collaboration with Dun & Bradstreet, provides live monitoring of over $7.5 trillion in goods powered by 130+ data sources covering over 60% of container shipments from origin. The platform enables customers to evaluate performance, risk, and shipment history for 500M suppliers and logistics providers.
TradeView gives customers the ability to identify up-to-date regulatory compliance and ESG concerns within value chains of products and companies, monitor the live flow of any company’s shipments 30–90 days before arrival at destination, and analyze trends across 10 years of historical supplier, product, and transportation data. Book a TradeView demo.
