International Update: Why You Should Outsource Global Trade Management

Whether you trade goods by the box or shipload—or perhaps neither, if you transact “virtually” over the Internet—the odds are that you’re constantly grappling with government regulations, multiple currencies, documentation requirements, tax issues, and mountains of paperwork. Not following international rules (now compounded by stringent security regulations) can result in severe penalties, including jail time and loss of trade privileges. But now that outsourcing is in vogue, what better way to simplify global trade management than to hand it off to someone else? This is fast becoming the best way to go, says a new report from trade consultancy Vastera Inc. (

It sends a shiver down the spine just to think about the massive penalties that non-compliance can carry. For instance, a company that recently violated trade rules while exporting pumps to Iran was slapped with a three-year corporate probation, a three-year suspension of export privileges, and a $6.3 million criminal fine, in addition to hundreds of thousands of dollars in civilian fines.

If that isn’t enough to convince you, here are five more reasons to find an external contractor to manage your international transactions:

(1) Lower headcount. Skilled trade and compliance professionals are expensive and difficult to find, so you’ll save tons of money and stave off recruiting headaches by turning to an outside service provider. If you participate in a preferential trade program such as the North American Free Trade Agreement, there are complex rules-of-origin and documentation requirements to follow—highly labor-intensive and time-consuming work—before you can collect the duty savings that these programs provide. Do yourself a favor and outsource this task.

(2) Reduced IT infrastructure. Yours may be one of the handful of lucky companies that can afford the staggering cost of building IT systems to support a compliant global trade operation—in which case, you can skip this paragraph. But if your firm doesn’t have deep pockets, look for an experienced service provider. For a reasonable cost, you’ll have access to sophisticated, state-of-the-art applications that do everything from order entry tracking to export fulfillment to audit checks.

(3) Higher supply chain efficiency. Global trade requires involvement in a worldwide network of shippers, freight forwarders, shippers, brokers, and 3PLs. Using a professional trade management firm will help you not only manage these relationships but stay abreast of new product classifications, seasonal peaks, and customs clearance issues.

(4) Better regulatory compliance. Let’s face it—there’s compliance, and there’s improved compliance. Why do just the minimum you need to when there are so many ways to use trade regulations to your advantage? The accurate documentation, reporting, filing, and record-keeping that a global trade management provider supplies aren’t just for streamlining trade; they also help you meet Sarbanes-Oxley audit requirements and support other business activities such as mergers and acquisitions.

(5) Renewed focus on core competencies. We’ve heard this in other contexts, and it applies here as well—concentrate on what you do best (we bet it isn’t filling out export documentation forms), and leave the rest to the experts.

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