<h3>Trade Deficit – What is this?</h3>A trade deficit, also known as Net Exports, is an economic condition that occurs when the imports is more than the exports in a country. The value of deficit is calculated as the difference in value of goods being imported and the value of goods being exported. This is one way of measuring the International trade of a country and is also known as the Negative Balance of trade.<a href="https://cogoport.com/signup/en-IN/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-3.png" width="auto" style="width: auto; height: auto;"></a>Depending on the circumstances in the country involved, the duration and size of the deficit and the policy decisions made, trade deficit can confer positives or negatives for the country. In the current scenario, United States has the largest trade deficit by far, with an imbalance of more than $7.3 trillion which has been accumulated in the past decades. The other countries that are facing deficit are Australia, United Kingdom, Mexico and Brazil. In the meantime, there are countries that have surpluses by exporting more than they import such as China, Japan and Russia.<h3>What Causes Trade Deficit?</h3>One of the main reasons why trade deficit occurs is when the country fails to produce everything it needs, has to borrow from other countries and pay for the imports. This is known as Current Account Deficit.Trade deficit can also be a result of manufacturing happening in foreign states. The raw materials that are required for manufacturing are shipped overseas to factories in other countries which are considered as exports. When the finished products are shipped back to the country, it is considered as imports. The imports are subtracted from the GDP (Gross Domestic Product) even if the earnings support the company’s stock price.<h3>What are the Pros and Cons of Trade Deficit?</h3>Economists react to trade deficits in different ways. While it implies that the country is living beyond its means and accumulating too much debt, there are reasons to say that trade deficit can be more pro-cyclical and is moving in the same direction as its GDP.<img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 2.png" alt="" width="300px">Employment Opportunities – When a trade deficit persists in a country over a period of time, it can affect the economic growth and stability. If the imports exceed exports, the domestic jobs will be lost to foreign countries. Even though this makes theoretical sense, it is also said that there will be unemployment at low levels with trade deficit and there can be more unemployment in countries that have surpluses.Value of Currency – The value of currency of a country is directly impacted by the demand of a country’s exports. When the demand for exports of a country falls compared to imports, the value of currency should ideally decline. In other words, trade deficit indicates whether a country’s currency is desired in the world market. Foreign Investments – Trade deficit should be offset by a surplus in the capital and financial account. Nations with deficit experience greater degree of foreign direct investments and ownership of government debt. As a conclusion, trade deficits are not always detrimental in the long run as the currency will always come back to the country in some form or another, such as foreign investment.<h3>What is the Bottom Line?</h3>Theories suggest that that having persistent trade deficits can be detrimental for the economy of a country by affecting the growth, employment and currency. However, countries like the US which is one of the biggest deficit nations has proved this theory wrong, time and again. This might also be because, US is the world’s largest economy and dollar is considered as the world reserve currency.When it comes to developing countries, trade deficit can bring upon a negative impact if it persists for a longer period of time. However, the advocates of free markets suggest that trade deficit corrects itself over a period of time through adjustment of exchange rates. Secondly, when there is competition in the world market, trade deficit is bound to correct itself. Ultimately, the impact of trade deficit will be determined by the consumer preferences.

Trade Deficit Explained: Learn and Understand

Roughly 80% of the global trade functions on trade financing. You may be missing out an opportunity today! Log into our webinar session today and find the perfect opportunity to take your business to new heights!Any business, especially export businesses, needs constant financial support. The challenge lies in access to funding. Exporters keep a wary eye on risks associated with current capital tied up to goods that are headed overseas.<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 2.png" width="auto" style="width: auto; height: auto;"></a>And, with limited access to loans and interim finances, traditional funding institutions may not want to risk offering loans or overdraft facilities for such transactions.&nbsp;When exporters can't always afford to wait until their exported products reach their destination before receiving payment, trade financing offers the ideal support. But what exactly is trade finance?Trade finance is the general term for financial instruments and products used by business to facilitate global trading and commerce. Specifically, it provides exporters of any size, with funding without tying up their working capital.&nbsp;So how does trade financing work for you?<h3>Invest in Your Business Growth</h3>Traditionally, a business would need to give investors equity or control over assets in return for financial support. This means either a business will have to tie up assets or accept limitations on their business until the borrowed funds are repaid.<img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-1.png" alt="" width="300px">Trade finance, on the other hand, offers funding without collateral obligations. It also offers freedom from restrictions of equity, associated with conventional loans. As a business exporter, you can capitalise on opportunities in the existing market, without affecting your cash flow. This allows you to gain greater profit from potential investments while diverting crucial funding to business's growth.<h3>Support Your Business's Custom Needs</h3>Traditional funding would finance generic aspects of a business on the overall, but not it's specific needs. This would mean taking on additional and unnecessary funding, with the responsibility of timely repayments and the risk of defaulting on penalties. Trade finance provides financing solutions for selected aspects of a business's needs such as suppliers, processing, transportation, logistics and regulatory stakeholders independently. This allows you to focus on specific aspects of business that require crucial funding, instead of taking on overall general debt.&nbsp;&nbsp;<h3>Secure Funding from Pipeline to Profit</h3>Export businesses that face lengthy trade cycles often experience delays in cash flow often hampering the start of new projects or future deals. The beauty of using trade finance is that it allows an exporter to fund specific opportunities or transactions, as opposed to waiting for sufficient cash flow to pursue them. When a business is sending multiple consignments abroad simultaneously the alternative to working with a trade finance provider would be to turn down orders from willing customers or to hand over a share in the business to someone with ready cash.While these are a few advantages of trade finance, you also need to be <a href="https://www.cogoport.com/en-IN/blogs/trade-finance-risks-exporters-should-beware" target="_blank" style="background-color: transparent; color: rgb(74, 110, 224);">aware of the risks of trade finance</a>. Are you interested to know more? Sign up for our webinar as our experts provide an in-depth analysis of the importance of trade finance and how it can help expand your business for a better tomorrow.

Are You Aware of the Importance of Trade Finance?

The consignee plays an important role in any shipping business or exporter. Here’s how you can build the trust of international consignees to ensure a continued and uninterrupted loyal service throughout the whole process of delivery of goods.<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 3.png" width="auto" style="width: auto; height: auto;"></a>Delivery of any shipment includes several participants. When a shipping consignment order is placed, the delivery is undertaken between a consignor and consignee via a delivery service.&nbsp;Here, the consignee is the entity who is financially responsible for the shipment delivery. In certain cases, the receiver of the goods may or may not be the same person. The individual may or may not also be considered as the owner of the goods delivered. At times, the consignee may also function as an agent that received goods from the consignor.&nbsp;However, no matter the role, the ownership of the goods is transferred only when the consignee has paid for goods delivered. If the goods are not sold, he or she will be held responsible for the inventory holding costs. At the same time, the consignee may also have to face the challenges of managing inventory related to the consignment, especially if multiple goods are assigned.&nbsp;The consignee plays an important role within the shipment delivery process. A consignor, or any other participant interacting with the consignee, would want to ensure that the relationship between them and the consignee is built on complete trust.&nbsp;<a href="https://cogoport.com/signup/en-IN/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-3.png" width="auto" style="width: auto; height: auto;"></a>Here are some of the key factors you need to communicate if you want to build a relationship of trust between your consignee:Settle on the responsibility of Incoterms: Incoterms are a set of terms and conditions, which define the responsibility of the delivery of goods. Shippers normally use Incoterms as a means to spell out who’s responsible for the shipping, insurance and tariffs and other charges on an item. As a consignor communicating with a consignee in terms of delivery of goods, incoterms greatly reduce misunderstandings and minimise trade disputes and litigations, and thus goes a&nbsp;long way to provide excellent customer service between the two parties.&nbsp;Protection of goods through insurance: As a consignor, you will want to protect your goods. You would also not want your consignee to be caught off guard, in the event they have to pay for damaged goods, especially not owned by them. The best solution, in this case, is to inform your consignee to maintain a certain insurance coverage when the imported goods are under their responsibility. In doing so, your consignee will be well protected financially in the event that the goods are damaged during shipment.Duty of storage: Until the goods are delivered and sold, the responsibility of the storage lays in the hands of the consignee. Any damage to the goods in this duration will result in loss of funds for the consignor and consignee. In this case, you can convince your consignee to agree to a certain duty of storage care, ensuring the goods are handled and stored properly, thus protecting both parties financial interests.<img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-1.png" alt="" width="300px">Buy out and stock rotation: It is the responsibility of the consignee to sell off the goods. Any delay in goods sold would result in a financial loss for the consignor, and loss of commission or even profit for the consignee. To protect the interest of both parties, it is best to set a time limit on the amount of time the consignee needs to sell its goods. If the time limit is not met, the consignee can either return the goods or purchase the goods for themselves, thus minimising financial loss.In any business, both local or even international, building a steady relationship between a consignor and a consignee is crucial for the growth and development of a business. The above-mentioned factors will go a long way to ensure that your business not only grows but also builds a better future. Sign up with Cogoport today to get the best service now!

How to Build a Relationship with Your Consignee

Last week was all about my speaking sessions at Intermodal Europe and the ICT &amp; Logistics event. And this week? Another speaking session! I was honored to be invited to speak at the VNO NCW Women's Network event in Rotterdam. A home game for me.<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 1.png" width="auto" style="width: auto; height: auto;"></a>The Confederation of Netherlands Industry and Employers (known as VNO-NCW) is the largest employers' organization in the Netherlands. VNO-NCW represents the common interests of Dutch business, both at home and abroad and provides a variety of services for its members. Over 160 (branch) associations are members, representing more than 185.000 enterprises. They cover almost all sectors of the economy, including more than 80% of all medium-sized companies in the Netherlands and nearly all of the larger, corporate institutions.The event’s theme was “She Inspires”. I spoke about my quest to make the freight industry efficient and transparent, how I got where I am today and the journey that took me there.The past week it was almost impossible to visit a news website and not read about Brexit. Other than this mention I promise not to go there this week. Obviously, there was a lot of other interesting things going on in the world of Freight and Tech. As usual, you can find the highlights below.<h3>Carriers, Freight, and what can happen to it...</h3>“Carriers said they are committed to ending their overreliance on pricing regimes that have sacrificed margins on the altar of market share and that have resulted in billions of dollars in losses. Yet such a dramatic shift to emphasizing value-added services is inherently risky. It requires substantial investments in processes and technology, costs that need to be recouped by attracting new high-margin business. It is unclear if users accustomed to enjoying cheap rates on sailing services will go for pricier, value-added solutions or would rather maintain the status quo.”<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-3.png" width="auto" style="width: auto; height: auto;"></a>→ <a href="https://www.dcvelocity.com/articles/30230-container-line-transformation-faces-its-biggest-test-from-those-paying-the-bills" target="_blank">Container-line transformation faces its biggest test from those paying the bills</a>“Typhoon Mangkhut, meanwhile, struck the Philippines, Hong Kong and mainland China: all important areas for freight import and export. Transport services were suspended, flights canceled, trains stopped and major roads closed in Hong Kong where winds reached more than 110mph and water levels surged to 12 feet in some places.”“FM Global, a commercial and industrial property insurer surveyed 101 senior financial executives at Fortune 1000 organizations just after hurricane season last year. In the report, 64% of the respondents said the hurricane season had an adverse impact on their business, and among those impacted, 62% were not completely prepared to deal with the effects.”→ <a href="https://www.supplychaindive.com/news/freight-surge-blowback-hurricane-michael-florence/542176/" target="_blank">October freight surge blown back by devastating storms</a>If you move your containers door to door via the Cogoport Platform, you will never be in doubt who is responsible for your cargo on any leg of the journey.“Containers frequently pass from one company to another on their long journey, and holding the correct party responsible can be difficult to ascertain with so many touchpoints.”→ <a href="https://www.freightwaves.com/news/containers/companies-paying-billions-for-damage" target="_blank">Container, trailer damage costs companies billions, even when not at fault</a><a href="/signup?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-2.png" width="auto" style="width: auto; height: auto;"></a><h3>Sustainability</h3>“A coalition of ports in Europe and the US are demanding the shipping industry deliver on the Paris Climate Agreement.Among those demanding action are six of the top ports in Europe and the US, Antwerp, Barcelona, Hamburg, Long Beach, Los Angeles, and Rotterdam, which have launched the World Ports Climate Action Initiative.”→ Container shipping and charity set their combined sights on 'greener' seas<h3>Data and Analytics</h3>While Michael Lewis, author of the Moneyball book (have you seen that movie?), was speaking about the trucking industry, this goes for the ocean freight industry as well. It is why the Cogoport platform is designed to increase insight for its users.“The freight industry could see sweeping changes in leadership as the sector goes through growing pains to adjust to a new age of big data and analytics, author Michael Lewis said ......"We're living in a moment where we're beginning to understand that data has magical possibilities," said Lewis, who is known for nonfiction book titles including Liar's Poker and The Big Short.”→ <a href="https://www.dcvelocity.com/articles/30226-author-michael-lewis-sees-turbulent-future-for-freight-markets-in-age-of-big-data" target="_blank">Author Michael Lewis sees turbulent future for freight markets in age of big data</a><h3>Freight Tech</h3>I love Tech. Whether it’s innovative IT solutions, or more operational solutions like autonomous ships, cars, or drones, Trucks and drones this week.“Last week, Einride started running its all-electric, human-free truck on a commercial route. The “T-pod” is moving pallets of goods between warehouses run by German logistics giant Schenker, in the southern Swedish city of Jönköping. It’s a small, one-year commercial deal: Einride is operating just one truck for the time being, and covering about six miles a day, some of it on public roads, at speeds below 25 mph.”→ <a href="https://www.wired.com/story/einride-self-driving-electric-truck-sweden/" target="_blank">Want to make an all-star electric truck? Drop the driver</a>“As cities across the U.S. look to reduce congestion on their streets, more are taking deliveries and safety initiatives to the skies, with a new drone initiative from the federal government helping drive those efforts.”→ <a href="https://www.supplychaindive.com/news/drone-deliveries-medical-food-disaster/542020/" target="_blank">For drone deliveries, the sky's the limit</a>

Freight, Sustainability, Analytics, and Tech

*Hike in customs duties would prevent the Chinese dumping of goods in India which we have been witnessing for a long time, especially post the USA sanctions on China. The Chinese companies have excess capacities for production and as a result, they are dumping goods in India at very cheap prices. The hike in customs and tariffs would prevent dumping of Chinese goods and will protect the local producers.*

The budget 2020 of India, is considered to be one of the most important in the last few years in the backdrop of slowing growth. <a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 3.png" width="auto" style="width: auto; height: auto;"></a>The government has to now make sure that the budget has policies which ensure inclusive development as well as the growth of the entire economy. The economy is currently facing a demand slowdown and hence the government needs to make sure that consumer sentiment sees a pick up in the coming quarters. First, it could bring into place policies that would promote exports like an export subsidy. This would increase the domestic production which would further propel the growth of incomes in the economy. Secondly, it could reduce imports by taxing them.Additionally, the global growth seems to be reviving which could thus propel our net exports if the right policies are in place. Hence, at this point in time, the import-export sector is one of the most important sectors in terms of the revival of growth. **The Budget for the Import-Export Sector:**

There have been various policy measures taken by the government in order to give a boost to this sector. They are as follows:

## 1. Niryat Rin Vikas Yojana (NIRVIK) will be provided for the upliftment of small exporters


The government, in the budget, proposed the NIRVIK, scheme, also called Export Credit Insurance Scheme (ECIS). Under this scheme, the insurance cover that will be provided to small exporters would be enhanced while on the other hand, the premium for the insurance would be reduced. This, according to the industry experts, is an appropriate and timely step taken by the government. The government is also working towards a simplified procedure for claim settlement.

This step was taken to achieve higher export credit disbursement. Earlier, under ECIS, the Export Credit Guarantee Corporation (ECGC) provides a credit guarantee of up to 60% of the principal and interest amount. However, now under NIRVIK, the insurance cover guaranteed would cover up to 90% of the principal and interest. This includes both pre and post-shipment credit. This is a crucial and a necessary step taken by the government especially due to the timing. This is because at the current time of demand slowdown and uncertainty existing in the markets, there exists a tendency for a rise in payment defaults.<img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-3.png" alt="" width="300px">
Additionally, NIRVIK is expected to increase the affordability and accessibility of credit insurance to smaller exporters while also reducing the liquidity requirements. This is one way to promote the exporters to export more, thereby boosting net exports and consequently domestic production.

## 2. Scheme for exporters will be launched to reimburse state levies to empower falling exports

The Finance Minister (FM) in her budget speech mentioned that a scheme will be launched this year by the government for the exporters wherein the taxes and duties paid by them would be reimbursed. The primary aim of this scheme is to boost falling exports. It has been proposed by the government that the remission of the various taxes and duties levied at the state and the centre would take place digitally. The taxes that are covered under this scheme include value-added tax (VAT), electricity duties and the fuel used for transportation. These have been brought under this scheme as these are not getting refunded or exempted under any other existing mechanism. This is a very important move as a similar scheme earlier proposed i.e. the Merchandise Export from India Scheme (MEIS) was not in compliance with the global trade rules. However, this is in perfect compliance with WTO rules as according to these rules certain state taxes on power, oil, education cess and water are allowed to be refunded.

This move would also encourage the exporters to export more as remission of such taxes essentially implies a reduction in the cost of operations. As a result, the margins of the businesses would go up leading to greater profitability for businesses. Improved profitability would, therefore, enable the companies to reinvest a greater proportion of their revenues thus leading to the growth of the export sector of the country.

## 3. Government targets to aim to increase Fishery exports to Rs. 1 lakh crore by 2024-25:

The government has targeted to increase the fishery exports of the country to at least Rs. 1 lakh crore by the year 2024-25. Additionally, the government has also proposed to increase the production of fishes to 200 lakh tonnes by the year 2022-2023. According to the speech given by the FM, there will also be the promotion of algae growth, see weed and cage culture. The government plans to involve the youth in this industry via 3477 Sagar Mitras and 500 Fish Farmer Producer Organisations. Involving the youth in the fisheries business would, on one hand, increase the fisheries exports while also it would also provide jobs to the youth. ## 4. There has been a hike in Custom Duties for luxury and food products:

One of the key policies in this year’s budget was the hike in custom and import duties on the import goods. The consumers would now pay much more for the imported food and groceries, kitchenware, ceiling fans, shoes and many other products. For some of the products, the customs duties have been hiked to as much as 100%. The main argument behind this move is to promote the “Make in India” initiative and to give a boost to the local producers and the local industries.

As a result of this hike, the prices of the majority of the imported goods from smartphones to electric vehicles would go up, leaving a hole in the pockets of the consumer. However, due to increased prices of imported goods, import substitution would take place. This means that the domestic consumers would now substitute the locally produced goods for imported goods. This would thus, enhance the aggregate demand faced by the local producers, thereby increasing domestic production. This would further help the economy revive the growth that has been missing for the past few quarters now.

Another very crucial point to be noted is that these hike in customs duties would prevent the Chinese dumping of goods that India has been witnessing for a long time, especially post the USA sanctions on China. The Chinese companies have excess capacities and as a result they are dumping goods in India at very cheap prices. This is hurting the local Indian producers. The hike in customs and tariffs would prevent Chinese dumping and will protect the local producers. As a result, growth in domestic production can be expected.

## 5. Announcement by the Finance Minister for the development of Export Hubs:

In the budget speech, the FM also announced that various institutional measures were being taken in order to develop each district as an export hub. The government has proposed an allocation of Rs. 27300 crores for the industry and commerce in 2020-21.
 
## 6. New chapter introduced in the Customs Act to tighten origin norms for Free Trade Agreement (FTA) benefits:

The government has inserted a new chapter in the Customs Act regarding the administration of rules of origin under trade agreements. The inclusion of this chapter now implies that the government would now have the power to suspend and refuse any kind of preferential treatment of tariff in case of incomplete information or verification or non-compliance. Hence, now the importers that plan to claim any preferential treatment with regards to tariffs under any trade agreement would have to declare that “the goods qualify as originating goods and must possess sufficient information about their origin criteria and regional value content”. This is a move to curb the growing imports by tightening the origin norms. This would help in boosting net exports, enhancing local incomes of producers.

## 7. Other Schemes which are empowering the exports to be continued:

Apart from these schemes and programmes, the government has also shown an intention to continue with the existing popular export schemes that no longer comply with the global trade norms. These include schemes like the Export Promotion Capital Goods Scheme (EPCG). Other schemes like the MEIS are subjected to be discontinued henceforth. The government has decided to continue with these schemes for a little while longer. There was another scheme, which was to be implemented from January 1, 2019 which focused on reimbursing some import duties to the exporters. The government had announced in this budget that this scheme would be implemented at some time this year.

## Final Words

Evidently, the government has taken some major steps to ease the export and import business while also making an attempt to boost the net exports by promoting exports and curbing imports. However, it is yet to be seen how the various stakeholders i.e. consumers and producers react to these policies. For example, if the demand elasticity of the goods with higher customs is very low, then rising prices would not lead to a fall in demand. This would thus not only generate inflation within the economy, but also fail to revive the businesses of the local producers. Hence, despite there being significant steps taken by the government towards boosting net exports and growth, proper execution needs to be there in place for the benefits to reach to the targeted population.

Budget 2020: Key Points for Importer & Exporters

In order to expand business presence across the world, a company needs to have a global product reach. It is desirable for companies to have a streamlined delivery mechanism in place, to bridge the gap between the consumers and them. <h3>Going Global</h3>Before planning the entire course of the shipment, you need to make sure that the goods you want to ship are not prohibited or restricted items in the destination country. You can do that by visiting official customs websites of the countries. <a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 1.png" width="auto" style="width: auto; height: auto;"></a>Some countries are easier to ship to than others. For example, India requires more personal documentation than most countries. It is important to be aware of the current geopolitical issues, this allows building trust with overseas partners. <h3>Do I Need Shipping Insurance? </h3>If a person wishes to ship a high-value item, they’re bound to assess the likelihood that the item may get lost, damaged or stolen. Therefore, it is important to get shipping insurance to have peace of mind when shipping goods internationally. There are numerous websites where one can generate shipping insurance. <h3>Start Shipping</h3>For a streamlined shipping experience, it is recommended if the entire process is automated. This will help in avoiding all intricacies involved in doing the work manually. Automation is taking over every industry, including shipping and logistics. Innovative companies like Cogoport have offered the consumers a platform to search for freight rates instantly and get transparency in tracking. Business owners should have a shipping tool which allows them to import all the individual’s orders from different sales channel onto one platform, automatically send tracking numbers, generate Bill of Lading, make sure the process is smooth, and schedule the pickups online.<img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-3.png" alt="" width="300px"><h3>Duties and Taxes</h3>A shipper is bound to pay various duties and taxes when shipping internationally. Following are the two ways to pay for duties-<ul><li>Delivery Duty Unpaid (DDU) - Duty is not included in the shipment cost and must be paid when the consignment arrives at the destination port.</li><li>Delivery Duty Paid (DDP) - Duty is included in the shipping cost and has already been paid before the consignment arrives at the destination port. </li></ul>Shipping cargo internationally demands a high level of documentation and declaration. However, there are numerous websites which make the task of documentation easier by doing 95% of the work.

Planning Your Next International Shipment

March has been quite an eventful
month for world trade.&nbsp;Adding weight to the
murmurs of a US-initiated trade war that could be heard in global trade
corridors since 2017, in the first week of March, citing “unfair business practices”, the US imposed a 25% tariff on steel
and a 10% tariff on aluminum imports from all countries except Mexico and Canada.<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 3.png" width="auto" style="width: auto; height: auto;"></a>







Later the European Union,
Argentina, South Korea, Brazil, and Australia were also exempted from the
tariff till the 1st of May. According to a statement released on the
matter, the US may look at setting import quotas for these countries and others
with whom it has security relationship if they are able to present a
convincing case.&nbsp;



The fear of a trade war further
intensified after a US trade announcement on 22nd March, targeting China.
 The US has specifically targeted imports
from China, placing stringent tariffs worth USD 60 billion.&nbsp;In addition to the tariff on steel and aluminum, another 1,300 Chinese products are expected to be included in the tariff list that will be published by the US Trade Department.China on its part
retaliated with a tariff of USD 3 billion on US products.&nbsp; The Chinese have listed 128 products
which include steel pipes, wine, fresh fruit, nuts, dried fruit, and pork.
There is a possibility that China may increase the tariff imposed on US
products.



<h3>Why
is US Imposing Additional Tariffs on China? </h3>



While China
is not the only country that has been targeted, it is one of the countries that
has been most harshly treated. So far. The US has a huge trade deficit balance
with the Asian giant. The other probable reason for the strict action can be
attributed to the “theft of intellectual
property” mentioned in Trump’s statement announcing the tariffs.<a href="https://cogoport.com/signup/en-IN/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-3.png" width="auto" style="width: auto; height: auto;"></a>To provide
some context to the huge tariffs imposed on China, the US Trade Department has also
released a report that highlights China’s aggressive behaviour regarding
acquisition of technology and trade secrets, theft of information and data.
According to media reports, the tariff is believed to help correct the trade
imbalance and warn China to control its own aggressive method of conducting trade.




Whether it
helps improve China’s behaviour or leads to further retaliatory measures remains
to be seen. Going by the communique of the two governments with the global
media, while China does not want a trade war, it is prepared to defend its
position in the event of one. 























<h3>Impact on India</h3>



India has
already been feeling the heat of US trade protectionist policies for a while
now. Decline in off-shore jobs from the US and the latest H-1B visa rules
which could make it difficult for Indian IT professionals in the US to get
their visa applications renewed are cases in point. 



We are also
facing a challenge from the US at the World Trade Center. Referring to the
Agreement on Subsidies and Countervailing Measures (ASCM), the US has raised
doubts regarding the validity of India’s various export promotion schemes.&nbsp;



Although the
extent of impact of the US – China trade war on India is not yet clear, trade
analysts have warned of declining export volumes if the war escalates. 



<h3>Impact on Global Trade</h3>



Trade experts
are divided on the positive impact this will have on the global economy. Some
are of the opinion that countries that have the capacity to offer replacement
or alternative products to the US could benefit from the restrictions placed on
Chinese imports. 



In the
meantime, negative effects of the impending US – China trade war have already
been felt with global markets falling after the tariffs were announced. The
standoff between the two influential economies may also impact global growth rate.




Inflation is
another issue that is being highlighted as an outcome of the US – China fallout.
The price increase would also affect the US market, with imports becoming costlier
and possibly short in supply.<img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-2.png" alt="" width="300px">



<h3>Why Should the Shipping Industry be Concerned?&nbsp; </h3>In all of
this, the shipping industry which is the main mode of international trade may end up as collateral damage. Tariff on imports could result in low demand for those
products – which in turn would lead to a decline in shipping volumes - which would
impact ocean freight rates. For an industry that is emerging from a slow growth
phase, this could be a huge blow. 



At a time when the global economy
has finally started to show signs of revival after the economic recession
witnessed in 2008, a trade war can again destabilise growth. In the long term, a trade war or even a perceived threat of one will create a negative economic and political environment.&nbsp;

US – China Trade War: Impact on Global Trade

Businesses are becoming increasingly global and complex in nature. In such an environment, a supply chain that is complicated, lacks transparency, and operates in silos is no longer viable. Today, to win and have a competitive edge, organizations need to build an integrated supply chain.<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 3.png" width="auto" style="width: auto; height: auto;"></a><h3>How Will Supply Chain Integration Benefit Organizations?</h3>An integrated supply chain will help streamline the business process and provide the following benefits:<ol><li>Improves collaboration: Integration will connect various stages of the supply chain into a single process. This, in turn, will create an environment that will help improve collaboration among the stakeholders of the different processes in the supply chain. </li><li>Reduces cost: Complicated and disconnected supply chains increase the operating costs without adding any actual value to the product quality. Integrating various processes and systems in the supply chain enables organizations to identify and remove unnecessary costs without affecting product or service quality. </li><li>Adds agility: An integrated supply chain is agile. It is more flexible and responsive to unscheduled demands made by the business or changes in the industry. Collaboration among all the functions of the supply chain and timely sharing of data gathered at each touch point is critical to achieve agility. </li><li>Simplifies the process: Large supply chains are known for their cumbersome and varied processes. This is not only time consuming, but also creates confusion among the different departments. Integration brings the entire supply chain on a single platform, thus simplifying the systems and processes.&nbsp; </li><li>Increases transparency:&nbsp;Integration allows for easy access and verification of information and data. It also lets relevant authorities within the system keep track of how the information is being used and monitor critical functions of the supply chain. </li><li>Saves time:&nbsp;Integration saves time spent on the follow up one process-stakeholder needs to do with another process-stakeholder to get the required information on time. This saved time can be used productively by employees in other important work. </li></ol>In addition to the above benefits, in the long run, integrating the supply chain can enable organizations to analyse and understand future needs of the business and start building capacity and business strategy over time.<a href="https://cogoport.com/signup/en-IN/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-3.png" width="auto" style="width: auto; height: auto;"></a><h3>Is this Enough?</h3>No. To get exponential benefits of integration, in addition to connecting an organization’s supply chain, it is also necessary to bring external service providers into the system - i.e. integrate the entire ecosystem in which your business operates.The following sample case study will highlight why it has become an urgent need to integrate not only your internal but also external supply chain system.ABC Auto Parts Pvt. Ltd., manufactures automobile spare parts. They have state of the art manufacturing facilities. Over time, the company has also managed to integrate and create a uniform process across its sales, administration, operations and manufacturing facilities. Within the company, information and processes flow seamlessly and without any hindrances.ABC sells to the local market and also exports its products around the globe. Since the scope of their business is large, they have a separate department for handling the transportation and export formalities.Despite the dedicated manpower, more often than not, there is some glitch or another that creates a delay in their shipments. Issues like - the contracted trucking company’s trucks not arriving on time, spending a lot of time searching for best ocean freight rates in the market, negotiating with forwarders or shipping lines, collecting documents from various vendors, delay in getting customs clearance, extensive follow up with various vendors, conducting a reference check every time a new vendor is added, monitoring the shipments till it reaches the final destination, etc., are common and take up a lot of time of the employees without adding any real value to the organization. Resolving these problems sometimes needs intervention from senior management, thus creating a bottleneck and adding to the delay.<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 1.png" width="auto" style="width: auto; height: auto;"></a>ABC Auto Parts is a classic case of a company that is suffering not due to its own inefficiency but that of the ecosystem that it operates in.&nbsp;While as a single organization, the different service providers in the ecosystem may not be inefficient but the diverse platforms used, varied processes, business language, timelines, and priorities make one organization seem inefficient to another.It is in such situations that we realise how important and urgent it is to bring all the participants in the supply chain - organizations and vendors who provide services like transport, customs clearance, packaging, insurance, and tracking of shipments till delivery to destination - on a single platform.<h3>Can it Be Done? </h3>Yes, it can and it is being done by using technology to create a digital supply chain.New and advanced technology has made it possible to build a single platform where all the players in the ecosystem can connect, collaborate, and complete the supply chain cycle. The supply chain ecosystem (manufacturers, marketers, logistics, and other service providers) too has started to realise the benefits of collaboration, communication and real-time exchange of data and information among themselves.<pdir="ltr" style="line-height: 1.656; margin-top: 0pt; margin-bottom: 0pt; text-align: justify;">This realisation has added anurgency to create an integrated and digital supply chain. It is no longer a requirement for the future, it is a demand that needs to be met now</pdir="ltr"><pdir="ltr" style="line-height: 1.656; margin-top: 0pt; margin-bottom: 0pt; text-align: justify;"><a href="https://www.cogoport.com/signup">Register</a> on Cogoport now to experience how a digital freight management platform works and to integrate your organization’s shipping process. </pdir="ltr">

Need of the Hour - An Integrated Supply Chain

There are certain things that should be considered when you decide to export agricultural products to Europe. The import of agricultural products to Europe is quite limited due to the temperature and climatic conditions there, which is not favourable to agricultural products. Few of the major imported agriculture products to Europe are Cocoa, tea, spices, soya-bean products, cotton, off-season fruits, vegetables, and coffee. Thus, the European Union gives huge credit to the farming sectors that are involved in agricultural trade with Europe from all over the world.
<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 3.png" width="auto" style="width: auto; height: auto;"></a>
Considering the financial strength and deficit of arable land in Europe, agricultural trade with Europe is a golden opportunity for many developing countries. In the data published by Eurostat in 2017, the total value of agriculture products imports and exports between the world and Europe was 275 billion euros. 

However, there are few things to speculate while exporting agricultural products to Europe, mentioned below.

1. Common Agricultural Products Exported to Europe:&nbsp; European agricultural production includes products such as vegetables, grains, fruits, and sugar. A major part of the agricultural products is exported to Europe, which includes dairy products, poultry, fruit, vegetables, and olive. In the data published by Eurostat in 2017, the total value of agriculture products imports and exports between the world and Europe was 275 billion euros.

2. Quality:

The first thing that you should keep in mind is the quality of agriculture products due to the consciousness of the people regarding their healthy eating habits. In 2017, the Vegetables were a major part of agriculture imports to Europe, which was around 48 percent. Foodstuffs and animal agricultural imports were 32 percent and 20 percent respectively. EU food law requires that the competent authority of the exporting country offers guarantees as to the compliance or equivalence with EU requirements for the food of animal origin. The authorities are present to make sure that the third countries should maintain the operational criteria put forward by the European Union, especially Regulation number 882/2004.<a href="https://cogoport.com/signup/en-IN/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-2.png" width="auto" style="width: auto; height: auto;"></a>3. Importance of Logo:&nbsp; You should keep in mind that the organic agricultural products you want to export to Europe should be produced along with a certified logo. It can be made clear from the fact that people of Europe buy 95 percent of the organic products that have an organic farming logo.

4. Demand in different regions&nbsp;:The places where the consumption of vegetables and agricultural products is more should be targeted, when exporting to Europe. According to FAO data, the vegetable supply is quite high in Southern Europe as compared to Northern Europe. In Northern Europe, the average supply is 195 g per person per day, which is 71 kg per person per year. However, in southern Europe, there is an average supply of 756 g per person per day. The place is to be researched before beginning with the exporting process as the WHO estimates that in more than half of the countries of the European Region, the consumption of fruit and vegetables is lower than 400 grams per day, and in one-third of the countries of the European region, the consumption is less than 300 grams per day.

5. Rules and Regulations:&nbsp;The European health certification and Accreditation Requirements are critical to the success of your export business. Regulation (EC) 178/2002 (General Food Law) is the regulation which sets out the general principles and requirements of European Union food law Health certifications are necessary for the import of agriculture products. Additionally, the quality certificates are also as necessary for marketing the products under a specific label. The establishment of EU rules and standards in the food and the agriculture sector has been happening in Europe for a long period of time. However, in January 2002, changed the scenario and the publication of a general food law took place in which general principles of EU food and agriculture law were established.
6. Importance of Research:

Before exporting, thorough research is necessary about the customer preferences in regards to agriculture products. The most exported items include foodstuff, beverages, and spirits together estimating around 39 % of the products, which has a value of around 31 billion euros. Products registered under chapter 23 estimate around 23 % of foodstuff imports, which has a value of 10 billion euros.
7. Competition in the Market:&nbsp;The competitiveness of the target market is a vital factor to be considered when you think about exporting your product. More than 500 million consumers and 21 million small and medium-sized enterprises (SMEs) can provide opportunities to grow and establish you in the competitive market. 16% of the world’s imports and exports are shared by the members of the European Union.<img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 1.png" width="auto" style="width: auto; height: auto;">8. Study of Models related to the export of agriculture products:

The model proposed by the International Plant Protection Convention should be studied thoroughly and followed while exporting the agricultural products to Europe. European Union has only one model certificate for exports and one model certificate for re-exports of plant products in accordance with international regulations laid out by the IPPC.
9. Packaging Policies:

The packaging and production laws proposed by the Agricultural Marketing Service (AMS) should also be kept into consideration, otherwise, the EU health certificate will not be granted to the product, and it might get banned from the European market. The method to obtain an EU Health Certificate requires the manufacturers to provide their final production and packing facility registered on the FDA Dairy Plant Reference List of EU approved facilities. There are certain certificates such as dairy EU storage, EU raw milk product health, and dairy EU transit.10. MRLs:

The European Union has established maximum residue levels (MRLs) in order to prevent the risk possessed by pesticides on food products. In case any product contains more pesticides than the mentioned number, then that product will be banned from the European market. It should be kept in mind that European buyers are strict in this aspect and they need information about the pesticides so that health standards can be maintained. 33 to 70 per cent of the supermarket chains ask for legal MRLs from the exporters.

<h3>What Does This Mean?
</h3>
While Exporting Agricultural Products to Europe, it becomes vital to look at the different rules and regulations set up by the European Union regarding agricultural products consumed in Europe. The market analysis and market trends of Europe should also be kept in mind along with the demand and taste of the European people.

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