convergence of logistics & trading · supply chain strategies in asia. acknowledged as an...

1 © www.markmillar.com

Convergence of Logistics & Trading

Danang, March 2017

Mark Millar www.markmillar.com

March 2017 in DaNang, Vietnam

Mark Millar MBA, FCILT, FCIM, FHKLA, GAICD, SCOR-P Speaker, Moderator, Advisor, Author Mark Millar leverages over 30 years global business

experience to provide value for clients with informed and independent perspectives on their supply chain strategies in Asia.

Acknowledged as an engaging presenter who delivers a memorable impact, Mark has completed more than 450 speaking engagements at corporate events, client functions and industry conferences across 26 countries.

A Visiting Lecturer at Hong Kong Polytechnic University, Mark is recognised in the 'China Supply Chain Top 20', as one of ‘Asia’s Top 50 Influencers in Supply Chain and Logistics’ and in the 2017 USA listing of 'Top Pros-to-Know in Supply Chain'.

Mark’s book “Global Supply Chain Ecosystems strategies for competitive advantage in a complex, connected world” was commissioned by leading business publisher Kogan Page of London.

www.markmillar.com

Roadmap: Convergence of Logistics & Trading

1 Global Trade and Facilitation

2 Globalisation Trends

3 Trade & Logistics

Global Trade - the world is on a path to greater prosperity and a sustainable future - thanks to global trade . . .

Source: Source: Mark Millar various

Trade becomes more complex as it crosses borders

Source: Mark Millar various

Globalisation of Supply Chains - outsourcing, offshoring; low cost country sourcing - international trade across multiple jurisdictions

Source: Global Supply Chain Ecosystems

Cross Border Trade: Roles are ‘situational’ ... Buyer becomes Seller Importer becomes Exporter

Trade Chain embraces numerous participants:

Source: SWEPRO

Measuring the Ease of Trading across Borders

Source: World Bank, Doing Business

Cumbersome Customs Procedures Customs transactions vary widely from country to country:

Source: World Bank, Doing Business

Trade Inefficiencies

Typical Trade Transaction . . . .

Passes through 27 to 30 parties – including brokers, banks, carriers, sureties and freight forwarders.

At least 40 documents are needed, not only for government authorities but also for related businesses.

Over 200 data elements are typically requested,

of which 60 to 70 percent are re-keyed at least once,

while 15 percent are re-typed 30 times.

Source: study by the United Nations Conference on Trade and Development (UNCTAD)

Source: UNCTAD

Trade Transaction Costs

Trade Transaction Costs range from 2% to 15% of the total transaction value

For world trade, estimate of transaction costs is 550 billion US dollars pa.

Enormous amount of time and money wasted

- hampering business, stifling growth and holding back economic development, particularly in developing countries.

Source: OECD Study

Trade Barriers Trade barriers are measures that governments or public authorities introduce to make imported goods less competitive than locally produced goods:

Tariff Barriers

Tariff = tax on imported goods

Quota = limit on the amount of goods that may be imported

• duties limit imports and raise revenue

Non-Tariff Barriers Product standards Local Content Packing, Labelling Shipping regulations Port / airport permits Onerous Customs • indirectly raises price

and lowers demand

Global Trade Challenges

Source: EximDesk

16 © www.markmillar.com Source: UN/CEFACT

Trade Facilitation - Four Fundamental Principles

Trade Facilitation definition

Trade Facilitation is

the simplification, standardization and harmonization

of procedures and associated information flows, required

to move goods from seller to buyer and to make payment. Source: United Nations Centre for Trade Facilitation and Electronic Business

Source: UN/CEFACT

Business processes and business transactions in international trade

Source: UN/CEFACT

Trade Enablers: Single Window Concept

Source: UNECE, UN/CEFACT

Trade Enablers: Authorised Economic Operator (AEO)

Source:

3 Trade & Logistics

Slowing global trade and anti-globalization (eft)

Source: eft Supply Chain Hot Trends, Q4-2016

Slowing global trade and anti-globalization (eft) Do you think there’s currently a global anti-globalization movement?

Slowing global trade and anti-globalization (eft) Why is global trade slowing?

Slowing global trade and anti-globalization (eft) What impact will/would the anti-globalization movement have on global supply chains?

Consequences of Increase in Barriers to Trade due to Anti-globalization sentiment . .

• Increases in costs for manufacturers and retailers • Increases in costs transferred to customers and

consumers • Increases in lead-times to account for increased

barriers • Shifts in production and sourcing based on

changing barriers • Shifting demand based on protectionist attitudes • More opportunities for domestic manufacturers and

retailers • More opportunities for cross-border expertise

33 © www.markmillar.com Source:

Trump pulls the TPP

Source:

The Game has changed !

Game has changed! 23062016

Trade Agreements: Multilateral, Bilateral . . . Free (FTA), Preferential (PTA) NAFTA, EU, ASEAN, TPP, RCEP, FTAAP

TPP: Trans-Pacific Partnership (RIP)

Source: Thomson Reuters

RCEP: Regional Comprehensive Economic Partnership

FTAAP: Free Trade Area of the Asia-Pacific

Whether Global or Regional . . . - Management Duties include Duty Management!

Source: Asia Briefing

FTAAP (21)

WTO – TFA = Trade Facilitation Agreement Bali Agreement, December 2013 Ratified February 2017

Generate USD 1 Trillion in export gains >50% in Developing Countries, 18m jobs

Source: WTO

WTO Trade Facilitation Agreement (TFA)

3 Trade & Logistics

Integrated Logistics and Transport - enable and empower trade and supply chains - every business, everywhere; the lifeblood of trade

the GLUE that connects and empowers the supply chain ecosystem

Source: Global Supply Chain Ecosystems

Customers demanding better logistics services Services being demanded most from hi-tech industry solution providers:

Source: eft State of the Hi-Tech Supply Chain 2016

More Efficient Logistics Practices can reduce Logistics Costs 30%, shorten Transit Times 65% and drive 20-40% more Trade – three approaches:

Customs, Security Admin Burdens Infrastructure

1 2 3 Reform Reduce Focus

“Administration can often be the most time consuming element in the life of a shipment" CEO of DHL Global Forwarding

Source: DHL Global Forwarding

IOR / EOR Services help customers ensure fast, smooth and reliable importing and exporting worldwide . . .

Importer of Record (IOR) is officially noted by governments as the owner or purchaser of merchandise being imported into a destination country; IOR can, in fact, be the owner, purchaser or a customs broker with the proper authorization, eg power of attorney (POA) Exporter of Record (EOR) is noted as the owner or seller of merchandise being exported from an origin country location to a destination country. Authorization can be given to an agent to act as EOR.

Source:

In many cases, is a freight forwarder or third party logistics provider

IOR / EOR is directly responsible for

Paying duty/taxes upon importation.

Filing specific declarations with various government agencies upon importation or exportation.

Obtaining any licensing, certification and authorizations to export if required for a commodity; in many cases before exportation to the destination country location.

Source:

Trade Compliance

Global Trade needs knowledge of country-specific import/export information, export classifications and licensing requirements;

Goal is to meet and exceed all worldwide trade regulatory requirements – and avoid costly mistakes that in some cases come with personal jail time and fines.

A strong Trade Compliance Program helps in reducing risk and shipment delays, as well as avoiding fines, penalties and forfeitures or other legal remedies such as the loss of import/export privileges.

Source:

Trade Compliance

On-Shoring, Re-Shoring trends . . . - increases domestic freight movements

When a product is produced entirely within a continent or a

country, freight will be touched domestically 8-12 times - rather than the 2-3 times it will be touched within the

consuming continent or country when a product is produced overseas and imported.

Source: Stifel

SHORING STRATEGIES: THE RIGHT MIX? Flexibility is key in shoring decisions

Source: UPS Change in the High Tech Supply Chain 2015

EMERGING MARKETS: THE NEXT FRONTIER . . . .Needs From Logistics Providers

Global Trade is the engine driving economic growth. - Logistics fuels that engine.

Source: Source: Frank Appel, CEO DPDHL

Global Supply Chain Ecosystems - strategies for competitive advantage in a complex, connected world Independent reviews & endorsements:

www.markmillar.com/book-reviews

Available online from www.gsce-mm.com

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