Buy or borrow?
Some carriers and freight forwarders are offering import/export software to their customers. Should you use it, or buy your own?
By Toby Gooley, Managing Editor -- Logistics Management, 3/1/2005
Anyone who's involved in international trade knows how complicated it can be. Depending on the countries and commodities involved, importing and exporting can involve hundreds of steps, dozens of documents, and multiple government regulatory agencies.
That's why companies today are searching for a way to make trade simpler and less labor-intensive. The answer for many is automation. Several global trade management (GTM) software packages have arrived on the scene, automating onerous, time-consuming tasks, including tariff classification, document creation, customs and export licensing compliance, duty and landed-cost calculation, and denied-party screening.
Because these programs are extremely complex and the regulatory information they contain must be updated daily, they can be very expensive—too expensive for many small and mid-sized companies. In the last few years, though, even the smallest importer has been able to access GTM software at little or no cost. How? By using software that some international carriers, freight forwarders, and third-party logistics companies (3PLs) offer to their customers.
But accessing trade automation services through an intermediary instead of buying the software isn't the best choice for everyone. Here's a look at the pros and cons of both options.
Attracting New Customers
The forwarders, carriers, and 3PLs that offer trade automation services have several motives for doing so. For one thing, it promotes client satisfaction by providing a superior customer experience, says Mutlu Celikok, a global marketing manager at FedEx.
It also draws in new customers, especially international trade neophytes or those who do relatively little international business. Such shippers are more likely to use providers that offer "one-stop shopping," rather than choose different providers for different functions. And it's cost-effective to help customers help themselves: If they use automation to improve accuracy and regulatory compliance, there will be less need for service providers to take costly corrective action.
The most widely used GTM services are those offered by FedEx and UPS. Trade automation was a natural fit for them: Both do business with thousands of small and mid-sized businesses worldwide, their success depends on automated processing and handling, and both want to provide end-to-end service. (Rival DHL was offering similar services but has suspended them. See "What About DHL?" below.)
FedEx claims some 500,000 registered users of its Global Trade Manager product and reports average year-over-year growth of 80 percent since its introduction in 2000. The service, which applies to both imports and exports, is free but limits users to 200 transactions per month. It includes such features as a library of more than 1,200 trade documents from 42 countries, and a duty and tax calculator for bilateral trade between 56 countries. It can be used not only for managing shipments, but also as a stand-alone research tool.
Global Trade Manager also is fully integrated with FedEx's Ship Manager software and makes use of the regulatory expertise of FedEx Trade Networks, the company's customs brokerage and international trade consulting arm.
UPS recently launched a similar product, called TradeAbility, which also offers a landed-cost calculator, tariff classification and product database, document library, and import compliance verification for 34 countries. Some services are free, and others cost between $1.25 and $2.00 per transaction.
TradeAbility integrates with information services offered by other UPS business units, says Gary Huff, marketing director for new product development. Using the company's Web Services technology, customers can integrate TradeAbility into their own procurement systems and websites, making the product available internally and to their customers, he explains.
At the same time, UPS announced enhancements to its Quantum View Manage product, which allows importers to view customs data and images of customs clearance documents. Continued...
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