Recent developments and business news updates from the international trade sector. In this issue: The EU: is staying in safer?; Tough penalties for breaking new container weight rules; BIFA “trailblazes” freight forwarder qualification; Book business tells its own story...; Overdue payments — concerns; Accolades for export students; More doors in China open for UK exporters; Warning that packs a punch...; OIA Global expands in SE Asia; and Forwarders back “aviation dithering” rap.

June 2016

The EU: is staying in safer?

Should Britain stay with what it knows? This was the question posed by Lesley Batchelor, Director General of the Institute of Export, when discussing international trade issues, including what a Brexit would mean for UK exporters.

She said, “At a time when a world recession is biting and just less than 50% of our trade is with Europe, we should question whether this is the right time (for a referendum). It’s a huge distraction when we should be working on trading with more markets and selling more to existing markets.

“With the increasing strength leaning away from the Western hemisphere it makes sense to consolidate and work with those markets we are already strong in, rather than try and develop new markets when from our trade figures we know that we still have much to learn about exporting.”

Tough penalties for breaking new container weight rules

Major new international rules will come into force on 1 July that require a container’s weight to be verified by prescribed methods before it can be loaded on to a ship.

The laws will stipulate the weighing of packed containers by calibrated and certified equipment, although, in limited circumstances, pre-weighed packages may be placed into the container and added to its tare weight.

This amendment to the Safety of Life at Sea Convention (SOLAS) was approved by the International Maritime Organization’s (IMO) Maritime Safety Committee, in 2014. Failure to comply will be a criminal offence, punishable by a heavy fine or a prison term.

Now regulated by the IMO, a UN agency, most coastal states worldwide are signatories to SOLAS, which was first convened in 1914 following the sinking of the Titanic two years previously.

SOLAS already demands that shippers declare container weight on the Bill of Lading and associated paperwork. However, it is estimated that more than a third of the 130 million containers transported around the world each year are overweight, which has clear safety consequences — hence the need for stricter verification.

The obligation to declare the weight of the loaded container falls on the shipper, as stated on the Bill of Lading or transport document. The named shipper will often be the company that is exporting the goods and responsibility falls upon that company — irrespective of whether it is using a third party to actually move the goods.

Exporters using containerised freight to ship goods must either ensure that they have carried out the weight verification themselves or that their freight forwarder can offer the service in a SOLAS-compliant manner.

If a valid weight certificate is not supplied, the container will not be loaded on to the intended ship, with an obvious commercial cost, including repacking, detention, etc — as well as causing delays that may heap additional financial penalties on the shipper.

In the UK, the amendment will become law without the need for an Act of Parliament and will be enforced by the Maritime and Coastguard Agency (MCA).

BIFA “trailblazes” freight forwarder qualification

In advance of the possible development of a professional qualification, the trade association for the UK freight forwarding and logistics industry is undertaking a survey to find out exactly what sort of skill development the sector wants.

Robert Keen, Director General of the British International Freight Association (BIFA), said, “Whilst we already offer mandatory training on things such as dangerous goods and air cargo security, we believe there is a need to take things a step further with a recognised standard.

“We want to improve the quality of education and skill development all round and in particular encourage the next generation of freight forwarders in their careers and we feel an application could and should be made for specific freight forwarding apprenticeships.

“Here, the UK Government has tasked employer-led groups (“trailblazers”) to work together to rewrite the apprenticeship standards with the intention that all current frameworks will be removed over the coming year or two and replaced with the new standards.”

BIFA recently appointed Carl Hobbis, formerly of DB Schenker, as Training Development Manager in a move aimed at driving forward the trade association’s training activities. Hobbis explained that, to begin with, BIFA is planning to survey its members and the forwarding industry in general to find out what they are looking for with regards to training and education.

The first of these surveys, on apprenticeships, is currently online and is designed to help BIFA ascertain whether there is sufficient demand for them to develop and establish standards for freight forwarders.

Keen added that BIFA would like to develop a professional qualification that would create a “certified” freight forwarder, as exists in other countries such as Germany, Canada, Australia and Singapore, which, he said, have much more sophisticated professional training and development programmes.

Book business tells its own story...

Companies contemplating the Iranian market, now that sanctions are being removed, are being cautioned by Davies Turner to make sure that they deal with a logistics company that has practical experience in dealing with that country.

Davies Turner, said to be the UK’s largest independent forwarder, points to its recent shipment of more than 95t of publishing material to the 29th Tehran International Book Fair (TIBF) as proof that it can deliver.

Since the inception of TIBF in 1987, Davies Turner has transported publishers’ books to the event from countries across the globe.

“Not a bad record,” says Group Chairman Philip Stephenson, “but not that surprising since our company, which first established an office in Tehran in the mid-1960s, has maintained that presence with an experienced manager through all the ups and downs of trade with Iran”.

Stephenson believes few would dispute his company’s claim to be Britain’s number one freight forwarder to and from Iran having pioneered the overland route as part of its multi-modal service mix and remaining active in the market by maintaining its own representative office for almost half a century.

“Fifty years ago, Iran was seen as the most up-and-coming economy in the Middle East. But things turned out very differently because of events in the late 1970s. However, there has been enough trade over the intervening years to justify Davies Turner’s continued presence there.

“The ending of sanctions is unleashing the country’s productivity and merchant traditions, boosting Anglo-Iranian trade.

“I would urge companies seeking to capitalise on the trading opportunities to entrust their shipments to a company that has kept its own presence in Iran for the past half century...

“As one of the longest established forwarders in Iran we have an in-built advantage over less experienced operators. Our manager in Tehran understands local requirements, regulations and guidelines for doing business.”

Overdue payments — concerns

Approximately seven out of 10 companies in India, China and Singapore experienced overdue payments in 2015, according to risk analysts Coface. The main reasons were “customer financial difficulties” (52%), “fierce competition impacting margins” (35.6%) and “lack of financing resources” (26.4%).

Regarding India, 84% of respondents faced overdue issues. There was a marked percentage increase in respondents (32% compared with 24% in 2014) “with more than 2% of their annual turnover involved in ultra-long overdue issues”.

China’s overall corporate payment experience remained weak, “with 80% of respondents reporting overdues in 2015 and 21% noting average overdue times of more than 90 days — the highest percentage among the regional countries surveyed”.

Singapore saw a sharp increase in respondents (35% compared with 23% in 2014) “with more than 2% of their annual turnover involved in ultra-long overdue issues. In addition, more companies (14% compared with 10% in 2014) reported average overdue times of more than 90 days”.

“Asian companies have been facing significant financial stress from overdue issues, compounded by the squeeze on profit margins owing to industrial overcapacity, subdued demand and keener business competition in recent years. It is not expected that non-payments will improve in 2016,” said Jackit Wong, Asia Pacific Economist for Coface.

Accolades for export students

The achievements of almost 200 students graduating from the Institute of Export (IOE) were celebrated at an awards ceremony held at Mansion House, London. A number of high-profile figures from the world of international trade acknowledged the students’ success at the Lord Mayor of London’s residence and speakers included IOE Vice President Lord Empey, Louis Taylor, Chief Executive of UK Export Finance, IOE Chairman Ian Taylor, IOE Director General Lesley Batchelor and IOE young President Arne Mielken.

The students who received the highest overall scores in each qualification were awarded prizes “for their dedication and commitment to their studies”, and “special congratulations” went to Emma Foley from Conex Universal Ltd on her Level 3 Certificate in International Trade; Aileen Lamberton from Scottish Enterprise, who graduated with a Level 4 Certificate in International Trade; and Michael Alexander from Grant Thornton LLP, who achieved a Level 5 Diploma in World Customs Compliance and Regulations.

More doors in China open for UK exporters

New links with China have been forged for UK businesses thanks to a pioneering partnership agreed by Chamber International.

The export specialists have joined up with the British Chamber of Commerce in Southwest China to agree reciprocal arrangements that will open more doors for businesses to meet potential buyers and customers.

The Southwest China Chamber has 240 member companies and many links with other local businesses, organisations and government departments.

Southwest China is one of the fastest growing regions in the People’s Republic, with Chengdu and Chongqing recording 8.9% and 10.9% growth respectively, compared with a national average of 7.9%.

Matthew Grandage, Chamber International’s China specialist, who paved the way for the partnership during a business trip to Chengdu, said, “We want to show UK businesses that there is far more to China than Beijing and the coastal regions. This area has a population of nearly 200 million people and has an increasing desire for high-quality goods and services.”

Warning that packs a punch...

Poorly packed, badly spaced and overloaded containers are putting the supply chain at risk, according to a panel of experts at this year’s Multimodal Chartered Institute of Logistics and Transport (CILT) Workshop in Birmingham.

A wide-ranging discussion looked at the dangers of non-compliance resulting in poorly loaded containers filled with unsuitable cargo, or those that had been badly fixed or unsupported.

A spokeswoman said that 20% of containers on decks varied in the stated weight by over 3t with the largest discrepancy recorded at more than 20t. “This is a major issue for the shipping industry and has serious implications for both commerce and safety at sea. Containers are the lifeblood of the cargo world and yet there are so many risks associated with poorly loaded containers and inaccurate reported weights that the whole supply chain can be put at risk.”

However, she added, the new Safety of Life at Sea (SOLAS) regulation coming into effect on 1 July would mean that all shippers would have to obtain a Verified Gross Mass Certificate for laden export containers.

OIA Global expands in SE Asia

OIA Global, a leading logistics and packaging provider, has announced “an important Southeast Asia expansion” with the opening of a new location in Chennai, India. A spokesman said, “Whilst OIA has had a presence in this location through a network of strategic partnerships for years, increasing customer demand required us to establish our own operation.”

Forwarders back “aviation dithering” rap

The statement by the UK House of Commons Transport Committee criticising the government for “dithering” over a decision on the expansion of UK airport capacity has received strong support from the trade association that represents the UK’s freight forwarding and logistics businesses.

Robert Keen, Director General of the British International Freight Association (BIFA), said, “The 1500 companies within BIFA share the Transport Committee’s belief that the delay risks damaging UK economic growth by deterring investors uncertain about the future of Britain’s communications.

“BIFA agrees with the Transport Committee that the UK must stop “dithering”, make a decision and set out a timetable for completing the project.

“We have already stated that last December’s announcement to delay a decision on the matter was about political expediency, not environmental matters.

“Like the Transport Committee, we accept that the package of measures to mitigate environmental impacts needs careful consideration and further work. We do not accept that all of this needs to be done before a decision is taken on location. In fact a decision on location would give more focus and impetus to that work.”

May 2016

Cargo: what’s in the box now doesn’t count

Container lines are no longer pricing cargo according to type. Simply filling their vessels is now the number one priority, according to data from Xeneta, an Oslo-based benchmarking and market intelligence platform for containerised ocean freight.

It says that oversupply, better supply chain management and downwardly spiralling fuel costs have made the market so competitive over the past 18 months that “what’s in the box” no longer plays a part in negotiations.

Data gathered by the firm illustrates that the market average price for transporting a 40-foot container from Shanghai to Rotterdam, on a short-term contract, has slumped dramatically since mid-2014. As of 19 April 2016, the market average price stood at $595 (a 78% drop compared to 1 July 2014) and at $321 for the market low (an 82% drop over the same period).

This, Xeneta CEO Patrik Berglund argues, has created a new market reality that has made almost irrelevant the type of cargo being transported.

“Traditionally cargo was rated by weight or measure, with the ratings based on the cargo type,” he said. “Calling a carrier or NVOCC’s rate desks for ocean freight was a painful experience, with negotiations based on cargo descriptions, packing, and cube — all designed to bring maximum revenue to the carrier.

“But now, as long as the box isn’t overweight — although even that isn’t always an issue these days — or filled with hazardous material, that’s all been pushed to the side. The carriers just want to be full, period.”

He added, “It’s also important to note how contracts can make a difference here. In the current market, short-term contracts, or those hunting good spot rates, are getting better deals than those with long-term contracts. This wasn’t the case 18 months ago.

“The cause for this shift is simply oversupply in a declining market.

“Over the past 18 months slowdowns in the Chinese and EU economies have cut Chinese imports by 19% and exports by 13%. When that’s married to the fact that 208 new ships were introduced to the market in 2015, boasting a capacity of 1.67 million 20-foot equivalent units (TEUs), carriers have a major problem: namely, a stunning 8.1% oversupply of TEUs.

“This is a very serious issue for them — one that demands action.”

Xeneta’s CEO described the situation as “the perfect storm” for the sector and one that will continue to redefine the landscape. “And the latest wave of mergers may add to the extreme competition...

“In this environment, there are rumours of rock bottom prices, with mentions of boxes booked for Qingdao-Rotterdam for as low as $100, or even lower. So, at present, ‘what’s in the box’ isn’t the question, it’s ‘can we have your business please’?”

Corner Shop backed by the Queen

British Corner Shop has been exporting UK goods to Britons living overseas since 1999, and, due to remarkable growth and sales over the past three years, the company has been awarded the prestigious Queen’s Award for Enterprise for International Trade.

British Corner Shop is said to be the leading online supermarket specialising in supplying British brands through innovative e-commerce platforms to the expatriate community all over the world.

According to the Queen’s Award office, “It provides fast-growing B2C retail and B2B wholesale/bulk sales services with impeccable customer service and competitive shipping and has focused on ensuring the right infrastructure is in place to facilitate and support growth.

“Experienced team members, fully integrated e-commerce infrastructures, efficient supply chains and leading-edge technology are just some of the focuses that have led to the success over the years.

“And this strategy is paying dividends as now, by adding very little cost to its overheads, the business has significantly increased sales and revenue. This is demonstrated by its overall turnover rising 112% in the past three years, with overseas sales growing by 107% over the same period.”

British Corner Shop delivers to 138 countries worldwide, and says that it has 150,000 customers out of the more than 5 million Britons said to be living abroad. Its hope is to double its customer numbers within the next two years.

New partner in Irish-Benelux trade

Dublin-based EFL International Distribution has signed an agency partnership with the Swiss firm Gondrand International that will see the two companies offering regular freight forwarding and logistics services in the trade between Ireland and the Benelux countries.

In fact, joint import and export services between EFL and Gondrand have already started, with a twice-weekly ocean freight service into Dublin from Rotterdam on Tuesdays and Fridays; and a once a week service every Friday from Dublin to Rotterdam.

On the Continent, Gondrand’s operational overland hub is at Tilburg, in The Netherlands. In Ireland, collection and distribution is handled by EFL itself through its own bonded warehouse in Dublin.

BIFA “looking dynamic”

As Multimodal 2016 approaches, the British International Freight Association (BIFA) reports that it is in “good shape financially and operationally with significant momentum, a membership of more than 1500 companies, and a clear strategy that leaves it well positioned to continue to provide effective representation and support for the UK and international freight services industry”.

As usual, BIFA will be exhibiting “in full force” at Multimodal from 10–12 May. All of its senior management, as well as its four regional consultants, will be on hand to provide any advice or information visitors may require.

BIFA Director General Robert Keen said, “The UK freight industry continues to be presented with a broad spectrum of challenges related to developments at home and abroad, leaving UK freight forwarders and logistics companies with plenty on which to focus their attention.

“For example, last year’s announcement about the mandatory verification of container weights from 2016 has left many BIFA members handling ocean freight considering what the impact will be, as does the creation of ocean shipping alliances by the major container lines in a bid to drive up freight rates.

“In air freight, the news continues to be dominated by the debate on UK aviation capacity; aviation security; and e-freight. On land, members face the ongoing problem regarding a lack of qualified HGV drivers.”

Logistics giant that continues to grow!

It was a case of up and up last year for logistics giant Dachser. Its consolidated revenue increased by 6.5% to €5.64 billion; and its shipments rose by 4% to 78.1 million.

“The primary contributor for this positive performance was overland freight services for food and industrial goods in Europe,” said Dachser CEO Bernhard Simon. “We reaped the rewards of our long-term investment policy and growth strategies, which we are consistently implementing throughout the company.”

Steel: risk may remain until 2018

Following a long period of increasing demand, driven by China in the early 2000s, steel is suffering from weak growth in the global economy, according to risk analyst Coface.

It says that the imbalance between supply and demand is being fed by overcapacity and Chinese exports, although earlier this year the Chinese Government announced the first reduction in production capacity — by 40 million tonnes.

Looking at the overall picture, Coface feels that the market may not “regain equilibrium before 2018”.

By way of explanation, it says, “The Chinese economy is undergoing structural changes. Manufacturing is giving way to the expanding services sector in China’s growth model. The country’s domestic consumption of steel has already reached its peak and will continue to decline.”

Nevertheless, it adds, “the rebalancing of supply and demand could be possible in two years’ time. While emerging economies will have less success in catching up than in the past, their growing urbanisation and expanding middle classes will be new relays for growth.

“The three sectors that use the most steel and continue to have positive prospects over the medium term are as follows.

  1. The automotive industry — has a substantial margin for progression in the emerging economies. For example, in India there are 100 autos per 1000 inhabitants (compared to 808 per 1000 inhabitants in the US).

  2. Machinery — is also benefiting from considerable growth, both in the emerging markets and in advanced economies.

  3. Construction activity — this should take off again, thanks to the strong potential for urbanisation in most emerging countries.”

April 2016

Budget disappoints freight forwarders

There was little in the recent Budget of specific relevance to the freight and logistics industry, according to the British International Freight Association (BIFA).

Robert Keen, BIFA’s Director General, said that members would be concerned by the Chancellor’s warning that storm clouds are gathering over the global economy, with an outlook that is materially weaker.

“Any softening in the global economy is likely to have a material impact on visible trade, which is the lifeblood of our members.”

BIFA was also disappointed that George Osborne did not expand on the transport capital spending increase that was announced in last year’s autumn statement.

“Back in November 2015, BIFA welcomed the news that funding would be provided for the largest road investment programme since the 1970s, but it would have been good to hear more good news on this front given that a lack of spending has caused the country’s network of A roads and motorways to become congested, undermining the UK’s competitiveness in comparison to its international peers.

“The earmarking of £230 million for road improvements in the North of England, including upgrades to M62, feels like a drop in the ocean compared to last year.”

However, BIFA welcomed the news that the freeze in fuel duty would remain, but Keen said it did not mean that the association would stop asking for an outright cut, the introduction of an essential user rebate and some form of fuel duty stabilisation mechanism.

“Global economy totters”

Although emerging economies recorded a slight recovery earlier this year, risk analyst Coface believes that the slowdown in advanced countries is disturbing the balance of the global economy more than ever before.

It says, “In the United States, despite a generally healthy economy, there are vulnerable points. While the services sector is doing well, buoyed by high levels of employment and household consumption, industry is suffering from the strong dollar.

“As for the United Kingdom it is facing uncertainty over its future within the European Union, which is increasing the volatility of financial markets and weighing down confidence indexes.

“In Greece, Portugal, Spain and Ireland corporate confidence is low, hampering growth, particularly with the rise of political risks...

“The Japanese economy is also hindered by low consumption levels... and after placing the country under negative watch in January 2016, Coface has downgraded Japan’s assessment to A2.”

As for China, Coface says, “While the Central Bank of China has reduced its mandatory reserves, supporting Coface’s growth forecast of 6.5% in 2016, the risk of a more significant slowdown remains.”

Overall, Coface believes that the fall in oil prices “has brought budgetary difficulties to exporting countries — their deficits are increasing more rapidly and operations in the hydrocarbon segment are challenged by negative external effects. These factors have led to several downgrades and negative watches”.

For example, Oman “remains one of the most vulnerable economies in the Gulf region when faced with low oil prices. Oil income (almost 85% of public income) dropped by 36.3% in 2015. Also, Saudi Arabia has seen its public deficit expand and “company confidence indexes are starting to deteriorate”.

Opening date for Panama Canal extension

Final testing ahead of the opening of the enlarged Panama Canal is expected to be completed over coming weeks, with the official Panama Canal expansion set to be officially inaugurated on 26 June.

The Panama Canal Authority has announced that the expansion programme — which will allow vessels with up to around 14,000teu capacity to navigate the canal, a rise from the current capacity of around 5000teu — is currently 97% complete.

Research last year by Boston Consulting Group and CH Robinson indicated that up to 10% of Asia-US container traffic could be rerouted to the USA east coast ports by 2020 following the opening of the expanded canal.

Cardiff to be new gateway to Ireland

An Irish logistics company is currently working with the Port of Cardiff in a move that it’s hoped will expand the southern UK gateways to Ireland where container services are concerned. Cronus Logistics said that it had engaged with Associated British Ports (ABP) to integrate Cardiff into its Irish Sea schedule enabling it to offer new door-to-door services for all full-load cargoes, while, at the same time, specialising in the steel, forestry and building sectors between Warrenpoint, Dublin, Bristol and Cardiff.

Ralph Windeatt, Head of Commercial, ABP South Wales, said, “This trade route is a vital link for our customers in South Wales, providing connections to suppliers and to important export markets. We’re pleased to welcome Cronus as a new operator for the route and hope that the additional capacity they will bring will allow more customers to benefit from the service and support economic growth and job creation in South Wales and beyond.”

The Port of Cardiff — which handles more than 12 million tonnes of cargo each year — was given a boost in 2015 with fresh investment by ABP.

Iran rejoins global community

After five years of sanctions, Iran is finally to rejoin the global community, says risk analyst Coface.

Iran is the second largest economy in the Middle East and North Africa (MENA) region, and according to the International Monetary Fund (IMF), its gross domestic product (GDP) stands at $416.5 billion.

However, says Coface, “With the removal of these sanctions, the Iranian governmental authorities expect to attract foreign investments of at least $50 billion a year. This figure is far above the $2.1 billion of foreign direct investments that the country attracted in 2014.”

“Key sectors that should lead the economy’s recovery in the post-sanctions period include transportation, housing and urban development as well as the oil and gas sector that the economy relies heavily upon,” commented Seltem Iyigun, economist for MENA and Turkey at Coface.

However, adds Coface, “the unfavourable global environment and Iran’s structural problems may delay the expected gains. First, sluggish world trade and regional turmoil are likely to dampen the initial positive impacts from the lifting of sanctions and the reduction in trade costs. Secondly, as the Iranian economy is heavily reliant on oil outcomes to boost its domestic economy, the fall in revenues induced by low oil prices could constrain public investment and the government’s policy support for post-sanction growth.

“Finally, Iran’s weak infrastructure and fragile banking sector will continue to hamper long-term growth prospects.”

Flag waving for AEO status

BIFA is pointing to two significant dates later this year that it believes demonstrate to forwarders why acquiring Authorised Economic Operator (AEO) status has never been more important.

  1. The Union Customs Code (UCC) is being introduced across the EU on 1 May. This will lead to a number of changes to how goods cross EU borders and some transitional arrangements will operate until 2020.

  2. Two months later, new worldwide shipping rules to be introduced on 1 July will mean that the weight of every container shipped must be verified using certified weighing equipment, or an approved calculation method.

Robert Keen, BIFA Director General, said, “It has long been BIFA’s belief that acquiring AEO status is about setting yourself apart from the competition. The process of become AEO certified itself gives a forwarder the chance to analyse processes, examine standards and identify corporate or organisational weaknesses. In turn, once issues have been resolved, AEO certification means that the freight forwarder’s clients have that certainty that their logistics partner has surpassed tight benchmarks in regards to standards of operation.

“This summer sees two days — 1 May and 1 July — that will be game changers for how the industry, especially in ocean trades, operates. Forwarders who are AEO certified or undertaking the certification will be ahead of the curve in dealing with the ‘new normal’ we all face.”

He added, “Increasing numbers of shippers, especially multinational ones, are demanding that freight forwarders have AEO certification before they do business with them, never mind being given preferred supplier status. So given that the new regime under the UCC requires many of the authorisations and simplifications of AEO status, it has never made more sense to acquire that AEO certification.”

German economy “to face risks”

In 2016, the growth of German exports to advanced economies should be solid and robust, whereas export risks are much higher for products destined for emerging markets destinations, according to risk analyst Coface.

It says, “The global risk mixture of political and military conflicts, terrorist attacks and structural challenges in many emerging nations, as well as China”s weakening GDP growth, are still weighing on the external demand for German products...

“Almost 29% of Germany’s total exports are delivered to emerging markets. Of these, more than a fifth are shipped to China, which is equal to 6% of Germany’s total cross-border deliveries. This share means that Germany is more exposed to external risks stemming from emerging markets than most other euro zone countries. On average, emerging markets’ share of euro-area exports is around 26%.”

Call for action over port dispute

BIFA has urged the Unite union and Forth Ports, owner of Grangemouth port in Scotland, to meet in order to achieve a swift resolution to the current industrial dispute.

It says that a strike there is having “a major impact on the general Scottish economy and the specific activities of BIFA members”.

In a letter to Unite, Forth Ports and the Scottish Government, BIFA Director General Robert Keen wrote, “Consultation and negotiation are two cornerstones to good industrial relations and BIFA urges all sides to meet as a matter of urgency in order to settle this dispute and get the port’s container terminal back to work.”

Three top tips for exporters

Britain’s overall exporting performance in the current decade has so far been disappointing, according to the Cole Commission report on the UK’s overseas trade. It says, “We are certainly not experiencing export-led growth. In 2014, the UK’s goods deficit was a staggering £120 billion; this was the worst gap since records began in 1998.

“This continues to reflect the UK’s appetite for imported consumer goods, the decline in manufacturing, the relative strength of sterling and, not least, the fall in indigenous oil and gas production.”

With this in mind, Simone Bruckner, Managing Director of Electrical Resitors Manufacturer Cressall Resistors, has produced three top tips for UK manufacturers considering exporting. They are:

Strategy

Preparing an exporting strategy may seem like an obvious first step for companies that want to start exporting, but the international market is a complicated realm. As an exporter, you have to adapt constantly, innovate and improve to stay on top — and your strategy is no exception to this rule. While a strategy may succeed in breaking into one country’s market, this does not guarantee its success in another.

In the early stages of entering a market, planning and research are essential. Deciding who your key customers are, putting together a viable plan of action and finding suitable business partners should not be done in haste. For companies new to exporting, UK Trade and Investment provides tailored advice and assistance — a great starting point for export beginners.

Relationships

Technology might make communication faster, but not always better. For exporters, preserving relationships with overseas customers is both integral and tricky. International trade exhibitions provide a great opportunity to travel to meet customers and distributors. Although, for manufacturers with a large customer base, this personal touch is not always practical.

When establishing potential overseas markets, it is essential to find partners and distributors with local knowledge of culture, courtesies and expected business etiquette. If you are equipped with on-the-ground knowledge, establishing the best practice for communicating with customers becomes less like guesswork. In fact, in most instances, working with distributors will take the stress of customer relations entirely out of your hands.

Ideally, distributors of industrial equipment should also have a technical understanding of your product. Paired with ready-made connections, this partnership will provide the best representation for your product on new soil.

Confidence

International customers are looking for confident, trustworthy suppliers, willing to invest a significant amount of time, effort and money into maintaining their overseas business connections. For Cressall Resistors, lasting relationships with customers are built on the foundations of fast delivery, trustworthy service and, above all, confidence in our exporting abilities.

Last reviewed 8 June 2016