INTERNATIONAL TRADE AND ITS IMPORTANCE FOR THE ECONOMY

As Freight Forwarders, we play a significant role in the overall worldwide commerce that fuels every economy in this planet; yet we focus mostly on the logistics and transportations needs of our clients and in rare occasions, we take the time to think about the importance of the International Trade in our economies.

International Trade has never been more important. In the early years, international business was only a part of big multinational corporations that had the capability to export or import products and commodities. Nowadays things have taken a shift, the international market is open to small and medium companies as well. Small companies can now engage in the international trade and thanks, these several factors below:

 

  1. Information is more accessible than ever before and thanks to the Internet, eCommerce, and Social Media which makes it much quicker to find information and share it with thousands of potential customers at a time.
  2. The overall logistics and transportation cost has gone down significantly. Let’s face it, General Ocean rates are much lower now compared to 10 or 15 years ago impacting our forwarding business as well as shipping lines giving more clients the ability to participate in international business.
  3. An increase in trade agreements along all continents and amongst different countries has lowered the barriers and tax imposition giving many more countries the ability to participate in export products, free zone industries, maquila, and various other services.

For companies and countries as a whole, International business helps them to reduce their dependence on their existing local markets, extends their sales potential and diversify their portfolio of clients, products, and vendors, which ultimately will enhance the competitiveness of the countries and the companies. Of course, there are more risks involved since companies have to compete with foreign companies in their local markets and have extremely care of their costs but can also take advantage of the international technology available to maintain costs and be able to increase sales and profits.

Companies interested in going global can opt for different options, such as:

  1. Direct Export: Business activities between an exporter and an importer without the intervention of a third party. This option is usually appropriate for wee-established and experienced businesses that are looking for ways to expand their operations.
  2. Indirect Export: Business activity that involves exporting goods through various intermediaries in the producer’s country. This option is usually appropriate for new companies or companies that do not want to invest much money or resources on the day to day exports. There are different ways but the more common area) the company uses a type of outsourcing which is dedicated to its exports, b) use of Distributors appointed in those countries or C) the company is supported by an International Trading Company that serves as its agent and helps to get the products in the market.

As freight forwarders being a part of the International Logistics chain, they may have to choose if they want to support the clients in their international venture or offer limited services by only transporting its goods. If they want to support them in growing their business, one way to do it is to get the support of well-known trading companies that are in the market already. As a result, being forwarders, we will not only get a closer cooperation with our clients but also become a key factor in their business, not only in logistics but as part of its commercial activities as well, securing their loyalty even more throughout the process.


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