Top 7 mistakes exporters should avoid in 2020
With globalization, it has become relatively convenient for businesses to overgrow the domestic market and expand to foreign territories. The fact that you can find your favorite Brazilian coffee in the supermarket next door or a Toyota racing on the roads in the United States is living proof of the global links that are facilitated by the exporters worldwide.
The contribution of the exports to the GDP of the countries is enormous. In the financial year 2019, the merchandise exports totaled to US$ 19.48 trillion globally. In 2020, the economic downturns have affected the trade, tariffs, and the supply chain throughout the world. Exporters are continuously evolving to get through such constraints. To make that possible, it becomes vital to have an in-depth understanding of the shipping processes as per the international business.
From leaving a port to entering a new market, exporters face logical as well as abstract challenges all the way. The business scenario along with the shipping regulations vary country-wise and every exporter must avoid some common mistakes to keep building up the global business presence.
Poor logistical planning
Logistical planning is imperative in ensuring that everything starts smoothly. If you are exporting goods to another country, you must make sure that the shipment sets off and arrives at the right time and place. No exporter can leave things to an unpredictable flow. You will need handlers on the soil of the arriving country to undertake responsibility. You will also have to consider any possibility of loss, damage, or theft. These things can be taken care of by choosing a logistics partner who is familiar with the rules and regulations so that the involved risks are minimized.
Overlooking the propitious foreign market
A propitious foreign market is a promising country or area which has got the highest demand for exports and offers a favorable environment for business. One of the basic rules of business is to know everything there is to know about these promising markets that are also commercially viable. Many exporters take a hit here by failing to recognize these markets, especially when they are new to the trade. The problem can be avoided by focussing on selected-few viable markets instead of diversifying into multiple countries, all at once. The key to achieving success in the export business is to streamline both efforts and focus.
For success in this unpredictable and over-competitive world, exporters can follow an approach of structured research to identify target markets and eliminate the least profitable, time-consuming, and expensive ones.
Inexperience with laws related to border control and distribution
One of the worst nightmares of any exporter is having the exports held at the customs and no resort to solve the problem. Non-compliance with local rules and regulations, chaotic customs clearance, and unforeseen taxes and tariffs are some of the hurdles that can negatively impact the flow of goods and have a direct impression on profitability. For example, countries like India have a tight restriction on foreign ownership/investment in some specific industries. Many other countries have got the protectionist laws that encourage foreign companies to work in collaboration with the domestic ones.
Exporters should look out for in-country partners who know the export-related framework inside out. All of this can help to keep the business safe from unpredictable jams and ensures a smooth movement of the goods across borders. In a nutshell, it is profitable for the exporters to seek the services of a logistics partner with in-depth trade compliance knowledge and had included custom law consultants to ensure smooth logistic flow.
Going in with a ‘one-for-all’ approach
In any business, nothing substitutes a research well-done. If you are planning on entering a new market, you will have to do it after conducting thorough research. Exporters need to understand that there cannot be just one product that can be accepted globally without any changes. Customization has been the key to successful businesses throughout the decades. Before you start pushing into a new market, it is vital to understand the local requirements, understand the customer preferences, and then localize the product to cater to the specific audience of the target market. So, a well-thought-out marketing strategy will help you capture a better portion of the market and minimize the risk of product rejection.
Not evaluating the financial risk associated with currency exchange rates
The risks in the exchange rates can directly reflect in your profits and not always in the best way. Countries with a stable business scenario do have a more predictable and stable financial system in place, but that does not eliminate the risk of fluctuating exchange rates. Every exporter must consider the basics of the evolution of the currency exchange rate by analyzing the political and economic changes in the country for a specific duration of time. Volatile countries and markets can crumble your growth slope into a slump, which is hard to get out of.
Failure to insure the shipment
When it comes to international logistics, accidents happen. The ship can crash, sink, or catch fire. Your goods can be damaged or stolen. Cargo thefts from the supply chains in the middle east, Europe, and Africa tallied to 8,548 incidents last year. In 2020, the numbers seem to be increasing dramatically. There is also some potential risk to the cargo due to perils of rough handling, extreme weather, and other unseen occurrences. Incidents like these result in the financial loss that might be hard to bear for many businesses. Sometimes exporters, in a bid to save some bucks, choose not to insure the shipment. Declining insurance coverage means taking a risk that includes the destruction of the entire shipment with no compensation. There is also a misconception that the goods get automatically covered for theft or damage, which proves fatal at times. You can have a liability coverage limited to $500 per container in case of steamship lines, $9.07/pound for international air carriers, and $0.50//pound for domestic airlines and truckers. The exporters need to discuss insurance requirements with policy providers and find out about the special provisions if any.
Hiring an incompetent customs broker
Choosing a partner to do business with can make or break the business. A partner with a good reputation can help establish a strong base in the market. Though fatal, it is not uncommon to see many exporters choosing the cheapest available option in a bid to go global. In doing so, they often neglect to conduct a thorough background check about their business partners. Such blunders can lead to disastrous results in terms of finance, market and worst-case scenario, reputation loss. Keeping the business growth accelerated, in the long run, requires conducting mandatory background checks and avoiding getting into an agreement with a disreputable company. You can investigate the customer testimonials to get a better picture.
If you are looking for the most reliable and trustworthy logistics partner, your search ends here. We at the Pedraza customhouse brokers Inc. have been streamlining export operations for millions of customers since 1989. You can count on us to help you navigate through the rules and regulations of the land.