Cross-border trade is an essential component of the global economy. However, it is not without its challenges. The last three years have been full of unexpected challenges that we all had to react to: The Pandemic, Supply Chain disruptions, political turmoil, war, raising inflation rates, tech lay-offs and so on.
I took some time to reflect on the world we are living in, both from a personal perspective, but also from a global trade and compliance point of view.
Top challenges in international trade in 2023
The global economy, shifting trade patterns, tariff barriers, digital technologies, and political uncertainty are just some of the factors that businesses will have to consider when engaging in international trade going forward.
What will be the biggest challenges in international trade in 2023? Here are six challenges I believe will affect traders the most in the coming year:
1: Protectionist Policies
The rise of nationalist sentiments in many countries has led to an increase in protectionist policies. The result? Tariffs and other trade barriers that make it more difficult for companies to engage in international trade. Companies face higher costs, reduced market access, and decreased competitiveness in international markets.
2: Complex Regulations
The complexity of international trade regulations is a major challenge for businesses. Regulations can vary greatly from country to country and can be difficult for companies to navigate. This can result in significant delays, increased costs and a reduced ability to access foreign markets.
3: Growing Number of Audits and Controls
Tax and customs authorities in numerous countries are stepping up the number of customs audits. Many are also implementing digital systems to improve their number of controls as well as detail levels in the controls. Importers and exporters will struggle to fully meet and comply with a growing number of audits and suffer under lacking routines for internal controls.
4: Political Instability
Political instability in some countries can lead to trade disruptions. Wars, civil unrest and other forms of political instability can lead to trade sanctions, embargoes, and other measures that can greatly affect international trade.
5: Cross-Border Supply Chain Management
The transportation and logistics of international trade are also significant challenged. Shipping goods across borders can be time-consuming and expensive. There can be significant delays due to customs procedures, border inspections, and other logistical issues.
6: Shortage of Customs Expertise
Traders and brokers alike are facing severe shortage of skilled and experienced customs professionals. With the complexities of Brexit, this issue has only become more pronounced, but it is not just a UK problem. Traders are grappling with the question of whether to hire customs experts in-house or continue to use external brokers. And if in-house, whether they should be responsible for self-auditing.
Maneuvering in a world of constant changes
As Head of International Business at Emma Systems, my job is to create and deliver solutions to support companies’ customs- and compliance work. Since I started early in 2021, we have faced constant changes that keep us busy, and the same is certainly true for our customers!
Companies who had and still are relating to Brexit or all the other changes going on in Customs must be alert and ready for anything. In the UK, the customs system is also being changed from Chief to CDS, which is a massive project as Chief was introduced in the 1990s.
Customs authorities around Europe are updating and changing their national customs systems to follow the UCC (Union Customs Code) decided by the EU. In short this means that all EU countries are running technical projects to increase the quality of customs filing and customs controls. These projects include numerous changes and will continue to run until 2025. Already this year, many changes are being implemented for import and export filing and will impact most companies doing cross-border trade.
At Emma Systems, the changes really keep us busy. EmmaSped CMS is being updated in the countries we cover, so both the new data elements needed, the communication with local customs and other changes are ready for the deadlines. For E-Doc, it means catering for the new designs of customs documents and present the data in our platform.
Preparing for new digital demands from authorities
Demands from the authorities are increasing and they are all digitising the way we communicate with them. In order to protect their revenue and the citizens’ rights, authorities are naturally focused on companies being compliant.
From a security standpoint, authorities are focused on companies compliying with Embargoes, Export Control Regimes and other security related measurements. In Europe the existing ICS (Import Control System) systems are being replaced by ICS2. This causes a lot of changes to the businesses and to the solution providers. All of the above is being done in the pursuit of a stable and secure world for our children and us.
What is Emma Systems doing to help?
Our work at Emma Systems, unfortunately, cannot address all the challenges and conflicts mentioned above. But every day we work hard to secure that our customers sleep well at night.
EmmaSped CMS (customs filing solution) helps our customers in filing millions of declarations every year in the Nordic region. There are many customs changes happening now, but our customers can rest assure, that we have them covered and their operations will continue without disruption.
Emma E-Doc , which passed 3,000 customers last year, is a fantastic platform that supports the post-clearance compliance demands.
Most companies change their customs brokers almost monthly. Documents sent by the different brokers can end up everywhere in your organisation. E-Doc ensures that you know who made the clearance and where to get the declaration, in case you haven’t received it already.
Having a large number of brokers/forwarders/customs agents connected to the platform is an important aspect of E-Doc’s strength. Daily, we are adding brokers to the portfolio, who can easily distribute the documents to their customers through E-Doc.
E-Doc also looks at the content in the declarations. It gives quick insight into the quality of the work your customs agent is performing. You can identify whether the correct country of origin, tariff code, currency or other fields were used.
Using E-Doc, many of our customers have identified significant cost savings and made changes to avoid future errors.
Product and Company Growth in 2023
Undoubtedly, Emma E-Doc has a lot of value for businesses as it is, but we have many interesting improvements planned for the coming months. New dashboards and alerts for easier analysis of customs data is on top of the list.
The international roll-out of the product also continues. As we speak, three new countries are being onboarded: Poland, the Czech Republic and Switzerland, bringing the number of countries up to eleven. We have additional countries planned the coming quarters, with Spain, Italy and Germany on the top of our list.
In addition to growing financially, our team is continuously expanding. We are dedicated to building and delivering great software, offering world class projects and customer service and do everything we can, to maintain our fantastic company culture.
Fortunately, our owners think long-term and recognize that people are the company’s greatest asset. This allows us to concentrate on making the right decisions for our customers and products and execute our strategy. Yes, we need to have a profitable company, but the profit is often a result of the above points. If we perform well, our existing customers are the most important ambassadors and generates positive interest in what we offer and the challenges our solutions solve.
I have spent 10 years in transportation and 22 years in Global Trade/Supply Chain Technology. If somebody had told me at school in the late 80s, that I would be working in the tech industry I would have called them crazy. It would have been equally surprising to me if I had been told that my future was in customs and compliance, and that I’d actually think that it is the most interesting (almost) topic in the world.
I really enjoy working with supporting companies in being compliant, in an efficient and smart way with products that are easy to understand and just makes sense.
So yes, we live in a complicated world, full of turmoil and disturbances that we all must manoeuvre in. But I know that things will get better at some point and doing business with each other, respecting the different cultures and utilising smart tools and solutions will be elements in building the best future for all of us.