5 GTM Trends to Watch in 2017

Just when shippers thought global trade management couldn’t get any more complex, a new presidential administration wants to change—and in some cases, do away with altogether—several existing and proposed trade rules and agreements. And until the dust settles and the verdict is in on those decisions, companies are going to need more support than ever in navigating the continuous and ever shifting flow of global trade.

Specifically, President Trump has now pulled the U.S. out of the Trans-Pacific Partnership (TPP) and wants to renegotiate the North American Free Trade Agreement (NAFTA). While the latter has been in existence for years, the former promises to “revamp global trade policies and make it easier for American entrepreneurs, farmers and small business owners to sell Made-in-America products abroad,” according to the U.S. Trade Representative’s office.

This point of “limbo” could alone push more companies to explore and adopt global trade management (GTM) software in 2017. “Right now, there’s a lot of confusion over how the U.S. presidential election will make an impact on trade agreements,” says Will McNeill, principal research analyst with Gartner.

For global trade management (GTM) software vendors, McNeill says this midpoint could present new opportunities to grow, expand, add capabilities and help shippers manage their regional and global trade agreements in a much more efficient fashion. “GTM can be a good risk mediator,” says McNeill. “You can use the intelligence built into the systems to really figure out what the global opportunities are. This is a chance for the software market to take advantage of this uncertainty.”

On the flip side, McNeill says shippers that have traditionally faced challenges in building a business case for a GTM investment may now have more leverage on their sides. “When it comes to GTM, there isn’t a lot of ROI to consider, so this could be a good opportunity to add to their business cases,” says McNeill.

For example, a shipper that’s concerned about shifts that could have an impact on its own regional trade agreements (i.e., reciprocal trade agreements between two or more partners) may turn to GTM to help manage some or all of the related risk, identify costs, determine duty savings, and ferret out new opportunities. “This is a good opportunity for GTM buyers,” McNeill points out.

5 GTM Trends to Watch in 2017

With the total volume of world merchandise trade growing by 1.7% in 2016 and expected to grow between 1.8% and 3.1% in 2017, according to the World Trade Organization, an increasing number of companies are looking outside of the U.S. borders to find and connect with trading partners, suppliers, and customers.

To help them achieve these goals, GTM provides a platform that companies can use to screen against sanctioned party lists, manage their export licenses, conduct embargo checks, and send electronic communications to customs. On the inbound freight management side of the equation, GTM helps shippers manage classification codes, generate import documents, determine landed costs, and ensure import controls.

A valued part of any company’s supply chain software stable, GTM continues to evolve right along with the shippers that are using it—and the complicated trade environment that it supports. Here are five key GTM trends that all shippers should keep an eye on in 2017:

1.) GTM vendors will beat a louder drum.

Up until now, McNeill says GTM vendors “haven’t done as much as they can” to prove that their solutions can help shippers navigate the complexities of the nation’s ever-changing trade agreements. This could change in 2017 as NAFTA and related issues move into a much brighter, national spotlight.

“I think there’s an opportunity for vendors to be doing more in this area,” says McNeill, who notes that GTM vendors like Amber Road and Integration Point have been stressing the need for software to support regional trade agreements for years. “These vendors will probably keep repeating that message,” McNeill says, “but as a whole the GTM market hasn’t been as loud as it could have been on these points.”

2.) More shippers turn to 3PLs and logistics partners for GTM.

As the GTM market has evolved, so too have the solutions that logistics providers and third-party logistics (3PL) firms offer their own customers.

This “indirect” approach to global trade management helps reduce shippers’ own investments in technology, as well as the associated maintenance and upgrades, while allowing them to outsource the complicated task of global trade compliance to third parties. Expect this trend to continue in 2017, says McNeill, as even more companies look to offload transactional processes to competent third parties.

“Shippers generally want to retain strategic decision making, such as how to classify their products for global trading,” says McNeill, “but we’ll continue to see a lot of outsourcing on the transactional side, including brokerage.”

3.) A bigger focus on GTM as a standalone offering.

As he surveys the GTM landscape, Amit Sethi, senior manager of logistics and supply chain at the consulting firm Capgemini, says that he sees a trend toward using standalone solutions versus those that are built into a transportation management system (TMS) or enterprise resource planning (ERP) platform. “

Where companies like Oracle may have built their GTM on top of their TMS,” says Sethi, “we’re now seeing shippers specifically wanting GTM and not worrying about the TMS capabilities.” Sethi says that users as a whole are leaning toward GTM over spreadsheet-based options, and looking to gain better control over their global trade operations.

“Shippers want to know more about their product classifications and want to be able to manage these functions in-house,” says Sethi, “and they’re finding that functionality in enterprise-level software designed to manage global trade.”

4.) Incremental increases in GTM functionality.

In assessing how far GTM has advanced over the last few years, and how far it still has to go, McNeill expects vendors to continue making incremental improvements to their solutions’ functionalities.

“I expect the market to grow incrementally as vendors continue addressing the issues and challenges associated with global trade,” says McNeill, who sees significant opportunity ahead for GTM vendors that align their solutions with digital business.

So, where shipping a box directly to a customer is one thing, digitally transmitting data to another firm that, in turn, prints out the label and produces the box is a different animal. “I don’t think a lot of companies understand that some—or all—of that process is regulated by import and export laws,” says McNeill. “The next big horizon for the software market will be addressing the trade compliance issues of a digital business. As of yet, I haven’t really seen a lot of vendors do a very good job of addressing that issue.”

5.) More globalized GTM options.

As more companies get involved with global trade, Sethi says that the software solutions that support these activities are also becoming more globalized. “GTM is [moving] away from the traditional way of defining global trade, and moving in the direction of being able to ‘ship from anywhere to anywhere,’” says Sethi.

Driven by the growth of e-commerce, omni-channel and other modern-day distribution approaches, this trend will surely continue in 2017. The GTM market is positioned particularly well in this regard, namely because of the high number of regulations associated with country-to-country imports and exports.

For example, Sethi says U.S.-based companies can’t ship products directly from China to France—and must bring the goods to the United States first, and then ship them to France. “From a software solution perspective,” Sethi concludes, “I think GTM is getting up to speed with the globalization aspect of trade and helping companies manufacture anywhere and ship to anywhere.”

What’s ahead for GTM?

In 2017, GTM will continue to grow at a modest rate and will generally keep pace with the overall supply chain market, according to McNeill. “GTM has never been a very high growth software sector, but it generally increases as software investment as a whole goes up,” he notes.

In most cases, that growth is capped by the challenges associated with making a business case for the software and by the low number of users that actually get hands-on with the systems during the course of the business day.

“When you consider the number of people who actually use a piece of trade compliance software, even in the largest organizations, it’s usually just two or three individuals,” says McNeill. “Compare that with sales force automation, where millions of salespeople all around the world are using the software. As a result, GTM growth is always going to be modest, but the need for these solutions is definitely there and growing.”