It stands to reason that when the global economy is in recession, the market for global trade management (GTM) software solutions will be down. However, the market did not shrink as much as you might expect, according to a study undertaken by analyst firm ARC Advisory Group. Between 2007 and 2009 the GTM market declined by a compound annual growth rate of -0.8%.
According to Steve Banker, ARC’s service director for supply chain management, “As trade recovers, the GTM market will recover as well, although we don’t expect strong growth until 2011. Our five-year forecast through 2014, however, reflects very robust growth.”
As ARC describes, the following types of trade content can change on a daily basis:
Global Product Classification: Harmonized schedule (HS) numbers that allow companies to determine how their products should be classified so that the correct duties can be applied.
Tax Classification: Different types of taxes might be applied to different products depending upon which nations the goods travel between. These include no taxes—free trade zones might apply, regular duties, preferential duty rates, countervailing duties, VAT taxes, etc. Tax classification also affects when and how the taxes are paid.
Regulatory Controls: Import and export regulations including licenses and visas, permits, inspection requirements, quota status (only a certain number of T-shirts can be imported into the US from Pakistan, for example), safety controls (toys from China were banned for a while because they contained lead paint), and other restrictions. These controls are applied by not just customs agencies around the world but by a variety of other agencies in the individual nations as well (Food & Drug, Transportation Security, Defense Departments, etc.).
Restricted Party Screening Lists: These lists are used to determine whether individuals, companies, or organizations are sanctioned by a government or restricted from conducting trade.
Documentation: Requirements for all trade lanes based on origin and destination, including those documents necessary to support the transportation of goods across borders, as well as the number of copies required, appropriate business rules, language requirements, and authorities for each document identified. There is a global trend towards mandating sending certain types of documents electronically prior to shipment.
There are also challenges associated with advanced electronic notification, calculating total landed costs, integrating GTM into a holistic governance, risk, and compliance solution, and other hurdles as well. This is why ARC believes the GTM systems market will be one of the fastest growing segments of the enterprise software industry.
