Financial Risks of International Trade - Paul H. Simpson, JPMorgan Chase

As the regulatory landscape grows more complex, importers and exporters are now strapped with greater risks.

Companies that are non-compliant with trade regulations are subject to financial and legal penalties that range from minor fines and delayed goods to criminal charges and loss of trade privileges. Senior officers now face personal liability should global trade compliance programs fail.

As the burden is increasing falling on the financial director and senior management to prove that internal controls are in place to help ensure that global trade operations are sound, companies are turning to global trade experts to analyze, design, implement, and often manage their cross-border trade activities.

What steps have you taken to help ensure that your business does not face shipment delays, bad publicity, and financial and operational set-backs? As the stakes get higher, does your company have the global trade regulatory compliance expertise in-house required to effectively move goods around the world?

An increasing number of well-established global companies are turning to business process outsourcing to face this challenge head-on as the cost of maintaining an in-house compliance organization is typically prohibitive and the pool of qualified trade professionals is shallow. In a survey of our customers, JPMorgan Chase Vastera has been told that our clients have found five bottom-line benefits to outsourcing global trade management operations:

COST SAVINGS

Skilled trade and compliance professionals are difficult to find, so you’ll save money and recruiting headaches by turning to an outside service provider. In addition, if you participate in preferential trade programs, you can capitalize on greater duty savings that are delivered more quickly by handing this task to an outsourced trade expert.

REDUCED IT INFRASTRUCTURE

Can your company afford the high cost of building IT systems to support a compliant global trade operation? Instead, why not take advantage of an experienced service provider and leverage their existing global IT systems, which can interface with your existing ERP application, and do everything from order entry tracking to export fulfillment and audit checks.

ENHANCED SUPPLY CHAIN EFFICIENCY

Global trade requires involvement with a worldwide network of shippers, freight forwarders, brokers and 3PLs. Using a professional trade management firm will help you streamline and keep greater control of these relationships.

IMPROVED REGULATORY COMPLIANCE

An outsourced company can provide you with instant access to hundreds of trade professionals around the world. These experts keep their fingers on the pulse of trade regulations around the world and know when important new laws go into effect, and more importantly, how to comply with and take advantage of these laws.

RENEWED FOCUS ON CORPORATE CORE COMPETENCY

When Global Trade Management is outsourced, executives are released from handling the headaches of global trade. This ‘freed’ time enables executive staff to refocus on the organization’s core competency in order to exceed customer expectations. It is best to leave global trade to the experts.

By establishing a strong compliance program that reaches across the company’s entire global supply chain, today’s corporate leaders are avoiding fines and the risk of legal action while ensuring that logistics and supply chain operations run without interruption.

Outsourcing yields quantifiable savings and helps speed international supply chain operations by streamlining processes to make them more efficient and effective. Organizations that harness the power of global trade can create a strategic advantage and better serve their customers by outsourcing complex trade operations, and focusing on developing core competencies. For organizations looking to uncover cost savings while driving operational improvement, outsourcing global trade processes is the solution.

About the Author

Mr. Simpson is responsible on a global basis for a variety of innovative JPMorgan Chase Treasury Services products, including Trade Services and Logistics, Electronic Financial Services (government payment services), Wholesale Cards and Emerging Payment Channels. Before coming to JPMorgan Chase, Paul Simpson was Managing Director and Head of eCash Solutions and Global Bank Export Services for Deutsche Bank. Mr. Simpson joined heritage Bankers Trust in 1997 as the Global Head of Trade Services. Mr. Simpson is a Board Member of the National Foreign Trade Council (NFTC), a Foreign Policy Association Fellow, and a committee member of the Bankers’ Association for Foreign Trade (BAFT) Project and Trade Finance Committee.