Mastering Import & Export Management
The book opens with a view of current world events that impact global supply chains, import and export operations, and the entire responsibilities that business executives have in trade compliance management. 2011 and into 2012 have seen a number of shifts in world politics, Middle East stability, and major physical occurrences that have huge short-term impacts on global trade, and these impacts may extend into the future for years to come.
The earthquake in Japan has rocked the world in a number of ways. Perhaps most important, the long-term utilization of nuclear power is very much in jeopardy. The impact of the devastating tsunami that followed goes far beyond the tragic loss of life that occurred. The insurance community who insured the risks involved with both events will have to pay hundreds of million in claims, potentially in excess of several billion dollars. This will impact insurance costs and the availability of certain types of insurances in risk-prone centers of the globe as well as for freight that moves on certain trade lanes. Cost and availability will become major issues.
Personnel involved in international shipping and logistics who had freight coming in and out of Japan are witnessing great delays in transit times, limited access to transportation infrastructure, and increases in freight charges. Shipping managers worldwide have looked at this disaster in Japan and have already begun to access risk management alternatives not only in earthquakeprone areas, but in all corners of the globe where there are significant physical risks such as but not limited to:
• Harsh changes from winter to summer weather patterns
These are but a few of the major physical exposures that companies who operate globally are now assessing, and they are reevaluating their supply chain decisions to avoid exposure and mitigate risk.
As of this writing, most professional assessments and benchmarks in world trade have shown a betterment in most market segments in the overall economy. Most manufacturing, inventory, and trade indexes have shown increases of 3 to 6 percent in 2011 into 2012.
While most sectors have shown improvement, there is still serious concern over the following areas:
• Stability of global banking and financial infrastructure.
• Housing and unemployment in the United States.
• Political instability in the Middle East.
• Financial issues in an array of countries, such as but not limited to Greece, Poland, Brazil, Venezuela, and the United States.
• The rise in government bailouts and increase in debt worldwide.
All of this impacts global supply chains.
It impacts cost, risk, and choice of global sourcing and offshore manufacturing, and it potentially retards the growth of globalization.
A good example of this in the United States is shown by the number of companies who had sent manufacturing overseas to Asia and the Near East but have moved some or all of it back here to America or to Mexico or Canada (referred to as ‘‘near-shoring’’).
Near-shoring makes a huge statement to the world. It says that from a competitive standpoint there may be better places to locate operations than Asia and the Near East (primarily India and Pakistan)—reversing a major trend of the past thirty years.
In logistics, these economic woes have reduced capacity in the ocean freight market, causing pricing instability and difficulties in locating available containers and chassis for timely, reliable, and consistent bookings.
Companies relying on the ocean freight mode to fulfill a time-sensitive supply chain have been hugely disappointed in 2011 and have had to make major compromises in risk, cost, and choice of carriers.
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