Supply chain trends
The top global trade trends
businesses are focusing
on in 2013.
As we move into a new year, many businesses are looking
for an edge to help them get a jump on 2013. With that in
mind, we reached out to Liz Lorincz, Livingston International’s
director of trade consulting for Canada’s eastern region, and
Bob Perkins, Livingston’s vice president, U.S. strategy, to get
their take on the trends they expect to see this coming year.
Compliance, compliance and more
compliance
“The Canada Border Services Agency (CBSA) is focused on
complete and accurate reporting,” said Lorincz, who sees
that correlating to an increase in audits. “Customs is making
it clear that they want to know that businesses are dealing
with trusted traders and that they know and understand their
supply chains.” As a result, there will be a renewed focus
on compliance in 2013 – both on the part of businesses,
which will be assessing their operations to ensure that they
are complying with customs regulations, and on the part of
customs agencies, particularly CBSA and the U.S. Customs
and Border Protection (CBP), which will be enforcing
compliance and assessing penalties on non-compliant
businesses.
Find out where Livingston’s trade
experts see businesses like yours placing
their focus in 2013.
Renewed interest in trusted trader programs
“The Beyond the Border initiative really aims at creating a
North American perimeter within which goods would flow
easily,” said Perkins. This means that companies must attain
a certain status that identifies them as low-risk, trusted
companies. They achieve this through participation in
Canada’s Partners in Protection (PIP) program, the U.S.’
Customs-Trade Partnership Against Terrorism (C-TPAT) and/or
Customs Self-Assessment (CSA).
Lorincz concurs and adds that she expects to see an increase
in the number of companies looking to achieve trusted trader
status, especially within Canada as CBSA works to enhance
the benefits to businesses under the PIP program. “Mutual
recognition between PIP and C-TPAT really resulted in more
benefits being attached to PIP,” said Lorincz. It’s also more
likely companies will invest in making their supply chain secure
enough to meet PIP standards when there are significant
benefits.
Added to that, Perkins believes that there is strong political
will and business interest in seeing the Beyond the Border
concept become a reality. That means that importers and
exporters who wish to benefit from shared regulatory
initiatives will be making the investments necessary to achieve
trusted trader status in 2013 and beyond.
Tighter internal controls
“Companies are looking to identify the gaps that create
risks, and they are looking for help to do this,” said Lorincz.
Because of the increase in CBSA audits, Lorincz has seen
an upsurge in businesses asking for complete reviews
from procurement to payment, looking at every internal
Trends to look for in 2013:
department and analyzing the customs environment.
Where before companies made decisions primarily based
on reducing costs, they are now taking a closer look at the
costs of non-compliance and attaching a number to risk.
• Focus on compliance
“Clients are reacting to the fact that non-compliance and
risk will cost them money,” said Lorincz, who expects that
the trend toward tighter compliance controls will continue,
leading many companies to consider another emerging
trend: sourcing locally.
• Sourcing locally
• Interest in trusted trader programs
• Tighter internal controls
• Growth in U.S. exports
Sourcing locally
There are a number of factors at play that are leading
businesses to reconsider their sourcing strategies.
In the U.S., according to Perkins, “The dollar has decreased
against other countries to the point where it becomes
cost effective to consider manufacturing back in the U.S.”
Other considerations include the political and economic
instability in some foreign jurisdictions, catastrophic
weather events that disrupt the supply chain and labor
unrest in the U.S. that has made transportation through the
ports somewhat difficult.
In Canada, Lorincz also sees a trend among companies
looking to mitigate their risk by sourcing closer to home.
This is particularly evident in the food industry, where
changes under Bill S-11, the Safe Food for Canadians Act,
will come into play in 2013 and will place the onus for
food safety securely on the shoulders of the importer. This
has resulted in importers “seriously analyzing the risk of
importing food versus the costs of sourcing at home, which
also offers benefits such as reduced transportation costs
and reduced compliance and safety risk,” said Lorincz. She
adds that she expects to see importers in general looking
at the whole sourcing question holistically, analyzing their
relationship with government agencies and trying to
determine what’s safer – sourcing at home or abroad.
Growth in U.S. exports
Perkins says that another trend he expects to see expand
in 2013 is the growth of U.S. exports. “Twenty years ago,
as a U.S. broker-forwarder, most of our business focused
on imports,” said Perkins. “Now it is close to 50-50.”
According to Perkins, exports have grown for two reasons:
the high quality of U.S. goods and the devaluation of the
U.S. dollar. This has been a boon to exporters.
2 Supply chain trends: The top trends businesses are focusing on in 2013.
Lorincz also believes that U.S. exports to Canada will
remain strong in 2013, partly due to the whole risk
question and the benefits of enhanced regulatory
cooperation as a result of the Beyond the Border initiative.
“It may be safer to source within North America,” she said.
The past few years have seen a definite focus on
establishing the proper controls to ensure the safety of
the supply chain, while also developing synergies and
coordination among agencies to enhance the flow of trade.
Given the continued integration of the global economy,
these trends are likely to continue through 2013 and
beyond.
Don’t forget to read our 2012 Year in Review!
Contact your Livingston account executive
e-mail us at solutions@livingstonintl.com
or give us a call at 1-800-837-1063
Visit www.livingstonintl.com