Efficient worldwide supply chain flows facilitate competitiveness, experts say

Global supply chains must evolve in order to keep pace with the ever rapidly changing needs of both shippers and carriers.

Countries around the world need to upgrade their border protection technologies and enhance trade facilitation in order to attract global economic giants to improve their economies through greater efficiencies.

“We were talking about trade facilitation before it was cool,” said Ralph Carter, FedEx Express vice president of international regulatory affairs. “If you want to be efficient, you have to have trade facilitation.”

Noting that “nothing is made in one country anymore,” Carter said global supply chain efficiency through technology and other means are absolutely the ante for worldwide players to get in the game.

“Trade facilitation produces the best return on development money of any kind of aid,” he said. “When you invest in border efficiency, it has the ability to help U.S. exports. You are giving them more ability to export goods.”

Carter and others spoke at the Chamber’s sixth annual Global Supply Chain Summit in Washington. The World Trade Organization recently got 164 countries to agree to work on greater trade facilitation to get more transparency into the process.

“This involves complicated procedural changes and more importantly a cultural shift in how some countries look at their border control processes,” Carter said. “The challenge for industry is to get an overview and see if this is going in the right direction.”

Global supply chains are what allows U.S. companies to take advantage of the skills and specialties of countries all over and helps them successfully compete in the global economy.

“Our manufacturers, logistics providers, pharmaceutical companies, and retailers are able to access new markets because supply chains offer a competitive advantage simply not possible 20 years ago,” U.S. Chamber President and CEO Thomas J. Donohue said at the summit. “Our small- and medium-sized businesses—and even e-commerce startups—are able to access global markets, thanks to the speed at which our products can reach the global consumer.”

Michael Dougherty, the Department of Homeland Security assistant secretary for border, immigration and trade policy, said that while the government wants to know what and who is entering this country, the government does not want to interfere with legitimate commerce.

The government has a balancing act between security and efficiency, he said. The government needs to be cognizant of what’s going on in industry. “You don’t want to be creating impractical, high-minded policies,” Dougherty said. “The instincts of government to gather information is not in conflict with industry. It’s what we do. Our obligation to the American people is to protect the border. But we respect that industry has to do as well.”

Lance Jungmeyer, president of Fresh Produce Association of the Americas, said his organization was created in 1944 and trade facilitation has never been more important than today.

“We want to shrink the border process to make things more efficient,” Jungmeyer said. He noted a joint U.S.-Mexico border inspection program operated at the Nogales, Arizona, that has cut delay times by as much as 75 percent. He believes such joint programs will be “emulated around the world” to create supply chain efficiency.

Jungmeyer said unified cargo processing agreements help augment ground transport efficiencies for ground transport. Inspectors from both countries might be working from the same facility to create efficiencies and reduce waiting times, he said. 

Government officials say they are still considering 100 percent cargo screening. Industry is generally again such programs because they fear delays will increase. While technology might be able to help, Jungmeyer said it was important for industry to speak up whenever such a high level of cargo inspections is discussed.

Industry-friendly associations such as the U.S. Chamber and others are backing “known shipper” programs that would exempt large worldwide multinational shippers from the burden of such inspections.

Geoffrey Powell, chairman of the National Customs Brokers & Forwarders Association of America, said customs brokers handle more than 95 percent of the goods entering this country.

“They are looking for predictability and visibility into the supply chain,” Powell said. “The facilitation is only as good as the worst of the government agencies” that must give clearance to goods transported internationally.

Powell said e-commerce is changing the way everyone does business. E-commerce is expected to hit $4 billion worldwide by 2020, he said. Often, these are small, one-person shippers who may not be cognizant of worldwide trade facilitation rules. “

“We’re all learning this together and seeing what the impact will be,” Powell said. “It’s a completely different set of folks who need to be educated,” Powell said of small-time worldwide importers who are doing vast amounts of e-commerce. “It’s a much larger market than what we are used to.”

Powell added that e-commerce sellers often fall into the export business by accident.

“They can just have an online presence and someone halfway around the world sends them an order,” he said. “That is often their first entry into the global export business.”

E-commerce “is going to be exciting,” said Dougherty of Homeland Security. “It’s like the wild, wild West getting exciting, because you don’t know what you’re going to get.”