<h4><strong>Covid-19’s Impact on the World Economy</strong></h4><p>The IMF estimates that the global economy <a href="https://www.bbc.com/news/business-51706225">shrunk by 4.4%</a> in 2020, the worst decline since the Great depression of the1930s, as a result of the Covid-19 crisis. Real GDP Growth for most countries has ranged between 0% to -15% in 2020 and global foreign direct investment has fallen from $1.5 trillion in 2019 to $859 million in 2021. World trade <a href="https://www.wto.org/english/news_e/pres21_e/pr876_e.htm">too has declined by 5.3%</a> in 2020 because of declining demand. Although a short-term positive recovery is underway, the World Trade Organization (WTO) estimates that we will continue to feel the effects of the pandemic and the pace of expansion will lag pre-pandemic levels in the near future. Accompanied by the disruption to the global supply chain, these events have serious long-term implications for the financial health of firms that drive a nation’s economy. </p><h4><strong>Trade as a Means of Recover</strong></h4><p>In response to the crisis, governments across the world have introduced stimulus programs for economic recovery. Given its ability to generate employment, and aid poverty reduction, boosting trade is another significant way in which the world can aid recovery. According to UNCTAD, “While the pandemic may be far from over, it had become clear that transforming global approaches to trade and development cannot be avoided when charting a sustainable course to recovery from the pandemic…it is our belief that recovery from the pandemic can help reshape global production networks and reset multilateral cooperation for the better, accelerating achievement of the Sustainable Development Goals.</p><p><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></p><h4><strong>The Trade Finance Gap </strong></h4><p>However, there are significant barriers to trade that have been exacerbated by recent global events. One such key impediment is access to trade finance – <a href="https://www.sc.com/en/feature/global-trade-now-faces-a-us3-4-trillion-financing-gap/">recent estimates</a> indicate that the trade finance gap has gone up from $1.5 trillion to $3.4 trillion. While access to trade finance affects all firms, it affects SMEs in emerging markets the most, despite their significance in generating employment and boosting economic growth. According to Deborah Elms, Executive Director, Asian Trade Centre, “If SMEs in emerging markets do not have access to financing – trade and other types of financial support – they will not survive the pandemic. Given the overwhelming importance of SMEs, this is a critical gap that must be filled by banks and other fintechs.”</p><p>Trade finance is important since it allows SMEs to manage risk and liquidity challenges. Both importers and exporters face counterparty and currency risks while engaging in trade. This is even more pronounced for SMEs with limited resources. Further, there are long payment cycles especially for cross-border transactions, which can strain working capital reserves. While trade finance instruments address these challenges, a significantly large number of SMEs face obstacles in accessing them.</p><figure class="w-richtext-figure-type-image w-richtext-align-normal" data-rt-type="image" data-rt-align="normal"><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></figure><h4><strong>Why is Trade Finance Inaccessible to SMEs?</strong></h4><p>According to the Asian Development Bank’s (ADB) survey of 469 firms, <a href="https://www.adb.org/sites/default/files/publication/739286/adb-brief-192-trade-finance-gaps-jobs-survey.pdf">over 40% of SME applications </a>for trade finance are rejected, compared to 19% for large multinationals. Reasons for rejection include the unsuitability of application for support (19%), lack of collateral (15%), lack of profitability (10%), KYC concerns (10%) and lack of information and poor presentation of application (8%), among others. The likelihood of trade finance applications being rejected has also increased significantly given macroeconomic uncertainties as well as weakened balance sheets because of reduced demand. Responses from banks surveyed by the ADB, corroborate these findings– 72.4% banks felt that Anti money laundering and KYC requirements were the largest barrier to trade finance, followed by Basel regulatory requirements(62.1%), general economic uncertainty due to the Covid-19 pandemic (60.9%),high transaction costs (50%), concerns about companies’ ability to perform during COVID-19 (49.3%), low credit ratings (44.9%) and client’s lack of familiarity with products (37.4%), among others. Moreover, when an SME’s application for finance is rejected, they resort to inefficient second-best options such as informal financing (which it typically more expensive) or self-financing (which ties up valuable capital).</p><p>A large segment of SMEs lack the awareness, skills and expertise regarding trade finance products. Further, trade finance instruments are characterized by high costs and complexity; they are also resource intensive, making them inaccessible to SMEs. For instance, letters of credit are relatively higher cost trade finance instruments that rely on specialist, accurate documentation from SMEs. Further, there is a mismatch between an SME’s ability to demonstrate fit and suitability against traditional measures of credit worthiness. Typical SMEs operate with limited resources and do not have the capacity to collate the data required for applications. Moreover, many SMEs have not yet digitized operations completely; hence, manual records need to be referenced for applications, which can make the process even more tedious for SMEs. Smaller firms also tend to be wary of digitization, since they believe that rather than create transparency, this will bring their operations under more intense scrutiny for compliance with corporate governance requirements. Robust compliance with such norms is again resource intensive and many SMEs do not have the expertise or human resources required. Given they are resource and capital constrained, most SMEs also lack collateral which affects their ability to secure trade finance.</p><h4><strong>A Change in Approach</strong></h4><p>There is a need for fintechs to look beyond traditional measures such as cash flow, profitability, and ability to furnish collateral when considering SMEs for trade finance. There is no denying that lending to SMEs involves a certain degree of risks; however, fintechs can consider characteristics such as a firm’s expertise in their domain, their future plans, their relationships with suppliers and buyers, to measure a firm’s potential and ability to pay. Moreover, there is a need to offer innovative financial solutions that can reduce the risk for the capital provider while lowering the information burden on SMEs. There is also an equal need for SMEs to focus on their long-term goals and investing in digitizing processes as well as maintaining records that improve their eligibility to receive trade finance.</p><h4><strong>Innovative Solutions</strong></h4><p>To overcome obstacles in accessing trade finance, there has been a move towards supply chain finance instruments such as receivables discounting and inventory financing. In addition, several financial institutions have adopted innovative solutions to assess an SMEs ‘worthiness’ for capital. For instance, some firms use a combination of elements such as past repayment records, business model assessment, as well as existing public domain data to gauge an SME’s suitability to receive trade finance. Some institutions are also looking at GST data to assess a firm’s credibility and have created products for GST backed lending. At an international level, the ADB, the European Bank for Reconstruction and Development as well as the International Finance Capital have pledged funds for trade finance. The International Trade Center and partners in November 2020 launched the <a href="https://sdg.iisd.org/news/itc-partners-launch-trade-finance-guide-for-smes/">SME trade Finance Guide</a> to help SMEs learn about access to finance. The International Chamber of commerce has launched ICC Trade Now to connect small businesses with financial service providers across its global network of 45 million businesses. The B20 and Business at OECD under the Saudi Arabian Presidency have proposed an innovative solution - the ‘GVC passport’ to provide an authoritative, authenticated, verifiable financial status of an entity that can be leveraged across the GVC without a firm being required to furnish the same information /documentation again.</p><p><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 1.png" alt="" width="300px"></p><h4><strong>The Path Forward</strong></h4><p>Despite these measures, there is a need for further concerted action by the ecosystem, especially fintechs to adopt measures to reduce the trade finance gap. Approaching trade finance from the perspective of truly understanding an SME’s abilities, challenges, and potential rather than defaulting to traditional financing requirements has the potential to bridge the trade finance gap, aid SME productivity and growth, and thereby improve their ability to contribute to economic growth and propel the sustainable development agenda. Summarizing this potential, By deploying technology and process improvements in tandem, an opportunity exists for fintechs to help bridge the growing trade finance gap. This will enable SMEs to fulfil their role as the much-needed engines of economic growth. Most importantly, by doing so, the world will be one step closer toward alleviating poverty and inequality.</p>

Trade Finance Gap: Impact on Inclusive Trade

Top Seven Shipping Lines: Past to Present

<p>An air waybill (AWB) &ndash; also called an airway consignment note or dispatch note &ndash; is a document that accompanies goods shipped by air. The International Air Transport Association (IATA) defines an air waybill as &ldquo;a critical air cargo document that constitutes the contract of carriage between the &lsquo;shipper&rsquo; and the &lsquo;carrier&rsquo; [airline]&rdquo;. The IATA is the global regulatory authority that prescribes a standard format of the air waybill.</p>
<p>Introduced in 2010, the electronic air waybill (e-AWB) has become the default document since 2019, digitising and simplifying the air cargo process. However, paper AWBs are still issued if and when they are &ldquo;required due to applicable international treaties, national law, or as bilaterally agreed between the parties&rdquo;, according to<a href="https://www.iata.org/contentassets/6c6b8373246b4b2db532ff9c89bee5a7/eawb-default-faq.pdf" target="_blank" rel="noopener"> IATA</a>.</p>
<p>In this piece, we delve deep into what an air waybill constitutes, what its various functions are, who issues it, who needs it, and how many types of it exist. Read on.</p>
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<h3><strong>What Information is Contained in an Air Waybill?</strong></h3>
<p>An air waybill is a form in which the following information must be provided:</p>
<ul>
<li>Name and full address of the consignee (importer)</li>
</ul>
<ul>
<li>Name and full address of the shipper (exporter)</li>
<li>Three-letter <a href="https://www.iata.org/en/publications/directories/code-search/" target="_blank" rel="noopener">IATA code</a> for origin airport</li>
<li>Three-letter <a href="https://www.iata.org/en/publications/directories/code-search/" target="_blank" rel="noopener">IATA code</a> for destination airport</li>
<li>Full route of transport</li>
<li>Shipment value of goods</li>
</ul>
<ul>
<li>Description of goods</li>
<li>Gross weight of goods</li>
<li>Dimensions of the goods</li>
<li>Number of items in the consignment</li>
<li>Special handling instructions, if any &ndash; for example, refrigeration required for perishable commodity</li>
<li>Terms and conditions of the carrier (airline) &ndash; for example, liability limits and claims procedures</li>
<li>Applicable shipping charges</li>
<li>Transport insurance details</li>
</ul>
<figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center">
<div><img style="width: auto; height: auto;" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/619e1518a3826ef9908536c5_info1.PNG" alt="Information that goes on an air waybill (AWB)" width="auto" height="auto" loading="lazy"></div>
<figcaption></figcaption>
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</figure>
<h3><strong>What are the Functions of an Air Waybill?</strong></h3>
<p>An air waybill is a legal document that serves as:</p>
<ul>
<li>Evidence of contract of carriage between the shipper and carrier (airline) &nbsp;</li>
<li>Proof of receipt of goods for shipment by the carrier</li>
</ul>
<ul>
<li>Freight bill, because it details the freight and ancillary charges involved &nbsp;</li>
<li>Source of contact information for all parties involved &nbsp;</li>
<li>Guide for handling, dispatching, and delivering the goods</li>
<li>Customs declaration document</li>
</ul>
<h3><strong>Format of an Air Waybill</strong></h3>
<p>The IATA distributes two types of air waybills:</p>
<ul>
<li>An airline-specific AWB, which contains the airline&rsquo;s name, logo, the address of its headquarters, and its air waybill number.</li>
<li>A neutral AWB, which has the same format and layout as the above but without the airline-specific information.</li>
</ul>
<p>An air waybill is issued in sets of eight with different colour codes. The first three count as original bills and the remaining five as copies. In the order of their placement and colour code, they are:</p>
<p>1. Green (original) &ndash; Carrier (issuing authority) copy &nbsp;</p>
<p>2. Pink (original) &ndash; Consignee copy</p>
<p>3. Blue (original) &ndash; Shipper copy</p>
<p>4. Brown (copy) &ndash; Receipt and proof of delivery</p>
<p>5. 6. 7. &amp; 8. White (copies) &ndash; To be kept by the shipper and used for various purposes &nbsp;</p>
<p>Each air waybill also comes with a unique 11-digit number that is divided into three sections. The first three digits are related to the carrier, the next seven are the bill&rsquo;s serial number, and the last digit is calculated by dividing the serial number by seven. This is called the check digit. &nbsp; &nbsp; &nbsp;</p>
<figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center">
<div><img style="width: auto; height: auto;" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/619e15ad7e072c705d4e5d6a_0001.jpg" alt="Sample image of an air waybill" width="auto" height="auto" loading="lazy"></div>
<figcaption>Sample Image of an Air Waybill<br>&zwj;<br><em>Credit: </em><em>aacargo.com</em></figcaption>
</figure>
<h3><strong>Air Waybill &ndash; Who issues it? Who fills it up?</strong></h3>
<p>The air waybill is filled by the shipper (or an agent or freight forwarder working on their behalf) and issued by the airline. Here we trace the steps involved in issuing and receiving an air waybill by the various parties involved:</p>
<p><strong>Step 1:</strong> Carrier issues the air waybill on receipt of the goods and completion of export customs formalities.</p>
<p><strong>Step 2: </strong>Shipper receives original copy of the AWB after handover of goods to the carrier.</p>
<p><strong>Step 3: </strong>One set of the AWB travels with the goods for transit reference requirement and import customs clearance. The shipper may also send the AWB through their bank to the consignee if the transaction is under a<a href="https://www.cogoport.com/blogs/3-ways-to-ensure-payment-from-your-foreign-buyer" target="_blank" rel="noopener"> Letter of Credit</a>. &nbsp;</p>
<p><strong>Step 4:</strong> On arrival of the goods at destination, the consignee (or their agent) approaches the local office of the carrier and collects their copy of the air waybill.</p>
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<h3><strong>Types of Airway Bills</strong></h3>
<p>In a typical transaction, the exporter hires a freight forwarder to take care of shipping the goods to the importer. The forwarder receives the goods from the exporter, passes them on to the carrier, and ensures they are delivered to the importer. In such a situation, two types of air waybills are issued. They are: &nbsp;</p>
<ul>
<li><strong>House Air Waybill (HAWB): </strong>This is issued by the freight forwarder to the exporter on receipt of goods for transportation by air. In this document, the exporter is named as the shipper and the importer as the consignee. &nbsp; &nbsp;</li>
<li><strong>Master Air Waybill (MAWB): </strong>Once the cargo is transferred to the main carrier and the export customs formalities are completed, the carrier issues a master air waybill to the freight forwarder. In this document, the freight forwarder is named as the shipper while the forwarder&rsquo;s representative at the port of destination is named as the consignee. This representative makes the final delivery to the importer. &nbsp; &nbsp; &nbsp;</li>
</ul>
<figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center">
<div><img style="width: auto; height: auto;" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/619e1608b51bbc749293f9dc_Artical%20Banner%20Info%2023.11.21.jpg" alt="HAWB &amp; MAWB: Who issues them, and to whom? " width="auto" height="auto" loading="lazy"></div>
<figcaption><strong>HAWB &amp; MAWB: Who Issues Them, and to Whom?</strong></figcaption>
</figure>
<h3><strong>AWB Mistakes Can be Costly</strong></h3>
<p>As the exporter, it is important to fill up your air waybill accurately or ensure that your freight forwarder does the same. Any irregularities can have various consequences for you:</p>
<ul>
<li>Your cargo could get held up by customs, resulting in a delay and the expenses associated with it (such as demurrage, detention, and storage fees).</li>
<li>You could be held liable for any damages suffered by the carrier or individuals involved in the shipment process as a result of your misdeclaration.</li>
</ul>
<h3><strong>Tips on Filling Your AWB</strong></h3>
<p>Here&rsquo;s a simple checklist on filling your air waybill and saving yourself a ton of trouble later on: &nbsp;</p>
<ul>
<li>Complete every part of the form and do it correctly.</li>
<li>When filling the form by hand, press hard on your ball-point pen and write cleanly and clearly.</li>
<li>Take out a clear print of the bill.</li>
<li>In the contact information fields, enter full addresses, including ZIP/postal codes.</li>
<li>Make sure that your shipment information &ndash; such as weight, dimension, value, HS code &ndash; are correct.</li>
</ul>
<ul>
<li>In the special handling section, point out if your shipment contains dangerous goods by ticking the appropriate box.</li>
<li>Finally, don&rsquo;t forget to sign and date the AWB. Remember, an AWB is valid only if it has the signatures of both the shipper and carrier. In case of a missing signature, the carrier can refuse to accept liability for the goods. &nbsp; &nbsp;</li>
</ul>
<figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center">
<div><img style="width: auto; height: auto;" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/619e17c546e2841d2a24b01e_info2.PNG" alt="Types and Formats of Air Waybills  " width="auto" height="auto" loading="lazy"></div>
<figcaption><strong>Types and Formats of Air Waybills</strong> &nbsp;</figcaption>
</figure>
<h3><strong>Track Your Goods With Your AWB</strong></h3>
<p>Apart from the uses mentioned above, an air waybill has one particularly useful function. Exporters and importers can use the 11-digit AWB number to track their shipments. This is because once an AWB is issued, the carrier will only identify your goods by their AWB number.</p>
<p>To track your shipment, all you need to do is visit the airline&rsquo;s<a href="https://cargo.airindia.com/in/en/track-shipment.html" target="_blank" rel="noopener"> air cargo tracking page</a>. There, enter your AWB number in the correct field and you will receive the latest available status of your cargo.</p>
<p>You can find the AWB number located prominently on all copies of your air waybill and in any emails and messages the carrier might have sent you regarding your shipment. Alternatively, you can call your carrier and ask for the AWB number, which they will provide after you have answered their questions regarding your shipment.</p>
<p><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-2.png" alt="" width="300px"></p>
<h3><strong>Air Waybill Versus Bill of Lading</strong></h3>
<p>Those of you who ship by sea are familiar with the bill of lading (B/L). An air waybill is the air cargo equivalent of a bill of lading. However, the two are more different than similar.</p>
<p>The main difference is that unlike a bill of lading, an air waybill is NOT a document of title to goods. This means that an AWB is not proof of ownership of the goods being shipped. It is simply a contract for transportation of the goods.</p>
<p>Due to this aspect, the AWB is also a non-negotiable instrument unlike a bill of lading. What this means is that an AWB does not transfer ownership of the goods. As a result, air waybills offer less protection than bills of lading. &nbsp;</p>
<p>Another key difference is that an AWB does not specify the exact flight in which the goods will be shipped or the date on which the cargo will arrive at its destination. &nbsp; &nbsp;</p>
<figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center">
<div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/619e1826dd532c7668246c57_info3.PNG" alt="619e1826dd532c7668246c57_info3.PNG" width="auto" height="auto" loading="lazy"></div>
<figcaption></figcaption>
</figure>
<p>To know more about bill of lading, its uses and types, <a href="https://www.cogoport.com/blogs/types-and-usage-of-bill-of-lading-meaning">click here</a> &nbsp;</p>

Air Waybill (AWB): Its Role in Air Cargo

India’s Top 10 Exports And Who Buys Them 

<p>Global shipping giant Maersk has turned every early earning forecast on its head with today’s announcement of its Q3 interim results. Buoyed by booming consumer demand and rising freight costs, the company is on track to deliver a yearly EBITDA of $1 Billion for 2021 in logistics and services, the highest ever in Maersk’s history.</p><p>Earlier this year, seven of the world’s largest shipping carriers recorded an EBIT of $1 billion for Q1, while three recorded an EBIT of $2 billion. Although staggering in themselves, what makes these numbers even more remarkable is that this is only the third time since 2010 that a shipping carrier has reported an EBIT of over $500 million in the first quarter. If this trajectory continues, major container lines could make a <a href="https://economictimes.indiatimes.com/small-biz/trade/exports/insights/container-shipping-earnings-now-rival-apple-its-not-a-good-look/articleshow/85552306.cms?from=mdr" target="_blank">collective operating profit of $100 billion</a>. To put this in perspective, this is what Apple Inc., the second most valuable company in the world, makes in a year. </p><p>Indeed, this is a time of exceptional demand for the big players in shipping and logistics. However, the shipping industry has been in ‘crisis mode’ for the last year and half. Last month, backlogs at ports in Los Angeles and Long Beach broke records of a different kind – average wait times exceeded 8 days and there were 65 cargo ships waiting to dock and unload. As of October 25, 77 ships wait outside the two ports carrying $24 billion worth of goods. Consequently, prices for consumer goods have soared and inflation rates are rapidly increasing. These congestions are unlikely to ease anytime soon and smaller players and service providers as well as SME customers are suffering the brunt of this crisis. This perfect storm is a result of several inter-related global phenomena. &nbsp; </p><p>In 2019, as restrictions linked to COVID-19 pandemic escalated, consumer demand slowed drastically, and global trade plummeted. Shipping lines were forced to cancel trips and dock ships. The shipping industry, which carries 80% (by volume) of the goods traded globally, stagnated. By May 2020, close to 2.7 million TEUs of <a href="https://www.hillebrandgori.com/media/publication/industry-sets-shipping-record-how-did-we-get-here" target="_blank">capacity was lying idle</a>. To put this is perspective, if these containers were loaded on to lorries, they would cover the motorway between Paris and Amsterdam, not once, but 135 times. &nbsp;</p><p><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></p><p>However, things changed rapidly as people, stuck at home, soon began spending money on manufactured goods. Consumer spending in the U.S was further fueled by the $1.9 trillion stimulus package. By the third quarter of 2020, the world economy had rebounded largely because a shift in spending patterns, and shipping lines scrambled to find containers and redeploy vessels. However, they were faced with major disruptions in the global value chain because of COVID-19 protocols and factory shutdowns. The industry also faced COVID-19 related port closures and shortages in staff, which slowed return to business. Not enough containers and ships were available to meet worldwide demand, driving up freight costs significantly. For instance, if a garment exporter from India paid $2,000 for a shipment to the U.S before the crisis, <a href="https://www.financialexpress.com/industry/sme/msme-exim-explained-how-msme-exporters-are-impacted-due-to-global-shortage-of-shipping-containers/2331609/" target="_blank">he now pays $10,000</a> for transporting the same goods.1 Ports are also slower to process incoming goods because of COVID-19 related measures. Congestions mean longer wait and offloading times, which in turn means ships take longer to get back to exporting countries like Vietnam, China, and India, to reload. The ripple effect created by slow redeployment, container shortages, and port congestions, has led to poor schedule reliability. In fact, during July and August <a href="https://www.hillebrandgori.com/media/publication/industry-sets-shipping-record-how-did-we-get-here" target="_blank">on-time performance was down to 35%</a>. On average, <a href="https://www.hillebrandgori.com/media/publication/industry-sets-shipping-record-how-did-we-get-here" target="_blank">more than 70%</a> of global container shipping vessels are unable to keep to their planned schedules. </p><figure class="w-richtext-figure-type-image w-richtext-align-normal" data-rt-type="image" data-rt-align="normal"><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></figure><p>Big importers are somewhat insured against drastic increases in shipping rates, at least in the short-term, as a result of pre-existing contracts. &nbsp;However, delays and lack of availability have spurred companies like companies like Walmart and Home Depot to <a href="https://www.bbc.com/news/business-58479148" target="_blank">purchase their own containers and charter ships</a>.2 These options are not available to end customers like small and medium enterprises, who are bearing the burden of these global occurrences. The shipping crisis is driving an even bigger gap in global inclusive trade. According to the WTO, “SMEs are over-represented in economic sectors that have been disproportionately affected by the massive shocks to demand and supply resulting from COVID-19. Moreover, MSMEs have less resilience and flexibility in dealing with the costs these shocks entail because of their size, which makes it more challenging for them to survive the crisis than larger firms.” </p><p>SME participation in global trade is largely driven by cost advantages, especially for exports from emerging economies to developed countries like the U.S. A significant increase in shipping rates negates this overall cost advantage, irrespective of whether the retailer or exporter bears the transport cost.3 Further, low cost-visibility, unpredictability resulting from the reduced availability of containers and increased transit times affects SMEs disproportionately. SMES are characterized by limited resources and cash flow buffers, and global supply chain disruptions have a direct impact on a small exporter’s profitability, cash flow, inventory and in turn their ability to reinvest and expand. </p><p>While exacerbated by the current Covid-19 related global supply chain crisis, these challenges are not new. &nbsp;SME’s have always faced several barriers to trade such as lack of access to finance, information, skills, and technology, which reduce their international competitiveness. The <em>Facebook-OECD-World Bank Future of Business Surve</em><em>y </em>found that SMEs with a digital presence cited finding business partners (63%) as their biggest barrier to trade, followed by market access limitations (41%), different regulations in other countries (38%), customs regulations (35%), language and/or cultural gap (33%), securing export finance (31%), poor online payment alternatives to sell online (29%), large geographical distance from home country (26%), and poor internet connection to sell online (18%). Data from other surveys indicate that access to information about foreign distribution networks as well as border regulations and standards are some of the main hurdles to participation in international trade. </p><p>As a result, SMEs contribute to just 20%-40% of overall exports for OECD countries despite accounting for 95% of all firms. This trends holds good in most other economies and on average just 10% to 25% of SME’s export goods and services as compared to 90% large industrial firms. Given <a href="https://www.wto.org/english/res_e/booksp_e/world_trade_report16_e.pdf" target="_blank">SMEs power the world economy - they contribute over 40%</a> to the national income in emerging economies and account for over 60% of the world’s total employment - their exclusion from international trade has deep implications for inclusive economic growth. &nbsp;</p><p><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 3.png" alt="" width="300px"></p><p>Looked at another way, <a href="https://www.worldbank.org/en/topic/smefinance" target="_blank">increasing trade participation</a> is one way of unlocking SME potential to spur growth and job creation. In fact, participation in cross-border trade will enhance SMEs’ &nbsp;abilities to not only survive this extraordinary time but also scale and grow, leading to increases in skills and profitability, boosts in consumption and therefore the economy. Growth underpinned by global trade has <a href="https://www.sc.com/en/feature/mankinds-most-important-invention-trade" target="_blank">enabled nearly a million people</a> to lift themselves out of poverty since 1990. In fact, the 2030 Agenda for Sustainable Development recognizes international trade as an engine for inclusive economic growth and poverty reduction, and an important means to achieve the Sustainable Development Goals (SDGs). Inclusive global trade offers the world a chance to accelerate its progress towards achieving SDGs. &nbsp;</p><p>However, in order to achieve more inclusive trade, several barriers need to be dismantled. We need to design solutions that are built on a foundation of deep understanding, and that create long-term gains for SMEs. This will not be possible until all the ecosystem actors – multilateral agencies, exporters, importers, individual nations and logistics players, come together to create enabling policies and infrastructure which level the field for SME participation in&nbsp;international trade. &nbsp;</p><p>We have undertake an in-depth discussion of some key challenges faced by SMEs in the next article on <a href="https://www.cogoport.com/blogs/decoding-trade-knowledge-and-execution-gap">Decoding Trade Knowledge and Execution Gap</a>.</p>

Maersk's Record Earnings: Impacts Trade?

<p>After nearly two years of the international trade devastating Coronavirus pandemic, there may be good news for exporters. Credit ratings agency India Ratings &amp; Research (<a href="https://www.indiaratings.co.in/PressRelease?pressReleaseID=55669" target="_blank">Ind-Ra</a>) said Indian commodities exports are poised for growth in the next 12 months, propelled by falling Covid, increasing growth and demand in India’s major export destinations, and rising global imports. </p><p>In 2021, imports have been forecast to rise by 11.4 percent in North America and 8.4 percent in Europe. It noted that the 2021 fiscal data gives the impression that major export destinations for India’s top 10 commodities are regions which are forecast to witness strong imports. Ind-Ra highlighted that India’s exports rose by 195.72 percent in April, 69.35 percent in May and 48.35 percent in June 2021. </p><p>As per the latest Federation of Indian Chambers of Commerce and Industry’s (FICCI) quarterly survey of the manufacturing sector, 58 percent of the participants are expecting a rise in Q2, 2021 – 22 while 30 percent think that export trends may proceed in the same fashion as in Q1. </p><p>However, all must keep in mind the lower monthly export metrics due to the Covid economic mayhem. As 2020 was not a normal year unlike 2019, the relatively lower exports from that year when compared with that of 2021 may give an impression of very high exports growth but in reality that may not be the case. &nbsp;</p><p><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></p><p>Read on to know more about: </p><ul><li>Performance of exports in August, 2021 </li><li>Performance of exports in September, 2021 </li><li>Does FIEO exude confidence on exports? </li><li>How the Indian government is giving impetus to bolster exports </li><li>Challenges for exports from India </li><li>Exports outlook for the second half of 2021 – 22</li></ul><h4><strong>Performance of merchandise exports in Aug 2021</strong></h4><p>Powered by commodities such as engineering goods, petroleum products, gems and jewellery, organic and inorganic chemicals, and pharmaceuticals, merchandise exports amounted to $33.28 billion in August, rising by 46 percent YoY. However, exports declined by 6 percent from that in July which was at $35.43 billion. </p><p>Compared to the last fiscal, the total value of merchandise exports from April to August in the current fiscal increased by 67.33 percent to $164.1 billion. </p><h4><strong>Performance of merchandise exports in Sep 2021</strong></h4><p>Just like August, a similar mix of commodities propelled merchandise exports to rise by <a href="https://economictimes.indiatimes.com/news/economy/indicators/indias-september-trade-deficit-widens-to-record-22-6-billion/articleshow/87021447.cms?from=mdr" target="_blank">22.7 percent YoY to $33.79 billion</a> in September, a marginal sequential growth from August. Total merchandise exports in the first six months of 2021 – 22 amounted to $197.89 billion. Commerce Secretary B. V. R. Subrahmanyam expressed confidence that India can meet the $400 billion merchandise export target in 2021 – 22. In 2020 – 21, India’s total merchandise exports were valued at $292 billion, lower than in 2018 – 19 when the country witnessed its best merchandise export performance, at <a href="https://economictimes.indiatimes.com/news/economy/foreign-trade/fy19-exports-may-be-highest-ever-at-330-billion/articleshow/68697073.cms?from=mdr" target="_blank">$330 billion</a>.   </p><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><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></figure><h4><strong>Does FIEO exude confidence on exports?</strong></h4><p>A. Sakthivel, President of FIEO said merchandise exports as a whole, which also include commodities, logged impressive growth, rising by 50 percent to <a href="https://fieo.org/uploads/files/file/FIEO%20September%202021%20(1).pdf" target="_blank">$35.43 billion</a> compared to July 2020. He said the cumulative value of merchandise exports from April to July stood at $130.82 billion, registering a high double digit growth of 75 percent, compared to the same period in 2020 - 21. Though the government is doing its bit in encouraging exports, Sakthivel observed that the need of the hour is to address the issues left out of Remission of Duties and Taxes on Exported Products (RoDTEP). </p><p><a href="https://economictimes.indiatimes.com/small-biz/trade/exports/insights/this-is-how-rodtep-scheme-can-impact-exports/articleshow/86111263.cms" target="_blank">RoDTEP</a> is a much-awaited scheme replacing the Merchandise Exports from India Scheme (MEIS), and aimed at boosting Indian exports and competitiveness globally. <a href="https://www.dgft.gov.in/CP/?opt=meis" target="_blank">MEIS</a> was instituted for the <a href="https://cleartax.in/s/merchandise-exports-india-scheme-meis" target="_blank">period 2015 - 2020</a> to reward exporters and offset infrastructural inefficiencies and related costs. It was discontinued because it was <a href="https://www.thehindubusinessline.com/economy/centre-limits-allocation-under-meis-scheme-for-exporters-to-15555-crore-for-april-1-dec-31/article33086688.ece" target="_blank">not compliant with the World Trade Organisation (WTO)</a> norms. &nbsp;</p><p>RoDTEP is a reform based on the globally accepted principle which mandates that taxes and duties should not be exported. It aims to refund the currently unrefunded duties, taxes, and levies borne on exported products at the central, state, and local levels. It will also include early stage cumulative indirect taxes on goods and services used to produce the product for export. &nbsp;</p><p>Sakhtivel also called for the release of funds allocated to MEIS, priority status to the exports sector, resolving key exporters’ issues, supplement flow of empty containers, establishing a regulatory authority to justify freight hike, and a freight support scheme among others. &nbsp;</p><p>He highlighted that RoDTEP rates will give predictability, stability and liquidity to Indian exports while <a href="https://www.dgft.gov.in/CP/?opt=rosctl" target="_blank">Rebate of State and Central Taxes and Levies</a> (RoSCTL) scheme is aimed at raising competitiveness, attracting investments and also spurring employment. RoSCTL is a scheme to offer rebate on all embedded central and state taxes and levies meant for exports of made up articles and garments. &nbsp;</p><p>Refer the below tables for a snapshot of five major <a href="https://fieo.org/uploads/files/file/FIEO%20News%20October%202021.pdf" target="_blank">commodities exports which rose and fell in September 2021.</a> Among 30 major export commodities, 24 witnessed growth, which also include cotton/yarn/made-ups, handlooms products, RMG of all textiles, electronic goods, plastic and linoleum, rice and marine products among others. &nbsp;</p><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/618a5c93196f5838ff76e605_Capture.PNG" loading="lazy" alt="Major commodities with exports growth in September, as per FIEO" width="auto" height="auto"></div></figure><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/618a5cd6d510a5430f5ebfc1_12.PNG" loading="lazy" alt="Major commodities with exports decline in September, as per FIEO" width="auto" height="auto"></div></figure><h4><strong>How the Indian government is giving impetus to exports?</strong></h4><p>The Indian Government is doing its bit to promote exports by implementing various schemes and measures: </p><ul><li>To clear pending incentives to exporters </li><li>Maritime India Vision 2030 </li><li>Land Ports Authority of India (LPAI) boosting cross border trade </li><li>One District One Product (ODOP) scheme </li><li>Prime Minister Narendra Modi advised diplomatic missions to identify exportable products </li></ul><h4><strong>To clear pending incentives to exporters</strong> </h4><p><a href="https://www.financialexpress.com/economy/big-relief-exporters-to-get-tax-refund-dues-of-56000-crore/2327500/" target="_blank">Indian government will disburse INR 56,027 crore</a> in 2021 – 22 as part of export incentives, benefiting 45,000 exporters. Nearly 98 percent of them are Micro Small and Medium Enterprises (MSMEs).</p><p><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></p><h4><strong>Maritime India Vision 2030</strong> </h4><p>This 10-year blueprint aims to transform the Indian maritime sector with an <a href="https://economictimes.indiatimes.com/industry/transportation/shipping-/-transport/maritime-vision-2030-envisages-rs-3-lakh-cr-investment-in-port-projects-20-lakh-jobs/articleshow/81295056.cms?from=mdr" target="_blank">investment of INR 3 lakh crore</a>, acting as a facilitator for exports. With the maritime vision, the government aims to raise transshipment volumes of Indian cargo within Indian ports, from 25 percent in 2020 to 75 percent by 2030, thereby saving money and avoiding payments to foreign ports. Other ambitions include implementation of an enterprise business system (EBS) to digitize operations at major ports. This will include introducing paperless procedures through a national marine logistics portal as well as an e-registration portal.</p><h4><strong>Land Ports Authority of India (LPAI) boosting cross border trade</strong> </h4><p>Established in 2012, LPAI pioneered the concept of land ports in India through Integrated Check Posts (ICPs), furthering trade with Pakistan at Attari, Bangladesh at Agartala, Petrapole, Srimantapur and Sutarkandi, Nepal at Raxaul and Jogbani, and Myanmar at Moreh. These ICPs handled exports worth INR 81,260 crore in 2020 – 21, enabling the movement of 4.2 lakh trucks. Numbering nine at the moment, ICPs are expected to rise up to 24 by 2030. However, India should also focus on de-clogging these border trade posts as they are witnessing heavy traffic and chaos. </p><h4>‍<strong>One District One Product (ODOP) scheme</strong> </h4><p>ODOP is an export promotion and market accessibility scheme being spearheaded by the Central government. The aim is to identify one top class product synonymous with each of the 739 districts to provide support for integration into supply chain, brand building, marketing and others. As part of developing the districts as export hubs, 106 exportable items have been identified from 103 districts under the first phase of ODOP by the Commerce Ministry, along with the states. </p><p>ODOP holds the potential to diversify India’s export basket and was even endorsed by Prime Minister Narendra Modi. Modi observed that ODOP will enable balanced regional development across districts. There will be ample scope for commodities exports under ODOP. Some products identified through this scheme include machine parts from Tamil Nadu, Naga Mirchi from Nagaland and best quality turmeric Lakadong from Meghalaya.</p><p><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></p><h4><strong>PM Narendra Modi advised diplomatic missions to identify exportable products</strong> </h4><p>Modi called upon the Indian diplomatic corps and export promotion councils to target <a href="https://www.thehindu.com/business/Economy/tap-opportunities-in-post-covid-world-to-take-exports-to-400-bn-says-pm-modi/article35773002.ece" target="_blank">the $400 billion merchandise exports target</a> and to take advantage of post-Covid opportunities. &nbsp;</p><h4><strong>Challenges for India exports</strong></h4><ul><li>Transshipment woes </li><li>Container shortage </li><li>Rail movement of containers </li><li>Skyrocketing freight charges </li><li>Will the impending power crisis strike exports </li></ul><h4><strong>Transshipment woes</strong> </h4><p>As reported in the <a href="https://www.thehindubusinessline.com/economy/logistics/govt-starts-work-on-box-transshipment-terminal-in-great-nicobar-island/article36302944.ece" target="_blank">Business Line newspaper</a> this September, Indian ports lose $220 million of potential revenues due to cargo transshipments originating and destined for India, moving through international ports. This subjects Indian exports to cost vulnerabilities, congestion, inefficiencies and affect trade competitiveness. It costs up to $100 more for each twenty-foot equivalent unit (TEU) to be handled at a foreign transshipment hub. Currently, majority of India’s transshipments take place at ports in Colombo, Singapore, and Port Klang. </p><p>These reasons have made a compelling case for a transshipment hub to come up at an ideal location in southern India. The Indian government has initiated steps to build a transshipment terminal at the Great Nicobar Island in Andaman and Nicobar Islands and intends to set up more such terminals in the future. &nbsp;</p><h4><strong>Container shortage</strong> </h4><p>At a time when the Indian economy and exports are slowly resurging and looking forward to the Christmas demand, after the crippling second wave of Coronavirus, container shortage is playing spoilsport. In the first week of September, Business Line reported how Chinese ports shutdowns due to Covid are impacting exporters as far away as in Kerala. Container shortage and exorbitant freight rates have even impacted tea price auctions in the southern state. Shipping lines are preferring to ferry exports between China and the US, and China and Europe, affecting other Asian nations’ export interests. </p><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/618a5eaeda1491cd64fec2ef_pexels-freestocksorg-122164.jpg" loading="lazy" alt="India massively lags behind China in terms of number of containers." width="auto" height="auto"></div><figcaption>India massively lags behind China in terms of number of containers<br><em>Picture from </em><em>pexels</em></figcaption></figure><p>Containers shipped to the US and Europe are not easily returning from those geographies, further aggravating scarcity of boxes in countries like India, especially at a time when a large portion of air freight has been diverted to the sea due to the pandemic. Consequently, Indian exporters are urging the government to extend the time limit allowed to keep empty containers in the country without incurring import duty. </p><p>According to current customs department rules, empties or destuffed containers can be kept within the country for six months, beyond which import duty will be levied. Amid acute container shortage, exporters are demanding this limit to be stretched up to 12 months. They also called for strengthening the state-run Shipping Corporation of India (SCI) while there is an ample room for Container Corporation of India (CONCOR) to play a bigger role. </p><h4><strong>Rail movement of containers</strong> </h4><p>As it nearly takes a fortnight on the road, for empty containers to reach exporters in the hinterland, the government is contemplating moving empties by rail. It will take just three days to reach exporters in North India from ports located in the western part of the country, compared to two weeks by road.</p><p><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 2.png" alt="" width="300px"></p><h4><strong>Skyrocketing freight charges</strong> </h4><p>A 20 foot container to the US, which was usually available at $3,000, was costing $14,000 in the first week of September. Similarly, the cost of a 40 foot container shot up to $18,000 from $5,000. It is important to look at the case of All India Spice Exporters Forum to understand the predicament of rising freight costs. Exporters who signed long term cost, insurance and freight (CIF) contracts are unable to renegotiate their deals in the light of skyrocketing costs as customers are not ready to rework the contracts, dealing a massive blow to exporters and compelling them to suffer losses. As a result, exporters are bearing the excessive freight costs and still living up to the contracts signed with international customers. </p><p>Considering this scenario, the Indian Spices and Foodstuff Exporters’ Association, Federation of Indian Spice Stakeholders and the All India Spices Exporters Forum have demanded that the cartelization, monopolization and restrictive trade practices of big shipping companies should be ended. These three organizations demanded the government to audit and start a high level probe into the costs of shipping lines, including making them come forward to agree to short term and medium term contracts. </p><p>Indian exporters are asking for domestic manufacturing of containers. It is also noteworthy to take note of how China is dictating world trade, empowered by its early investments in shipping container manufacturing. Due to exorbitant freight costs, Indian exporters are demanding the government to establish a regulatory authority for justifying freight costs and the imposition of several charges by shipping lines. Sakthivel asked the government to provide freight support till March 31st, 2022. &nbsp;</p><h4><strong>Will the impending power crisis strike exports?</strong></h4><p>At a time when India is staring at a coal shortage, the lion’s share of coal supplies are being routed to coal fired power plants, depriving many power hungry industries which export. It remains to be seen how this difficult situation will be coped with by the industries. Will there be curbs? <a href="https://timesofindia.indiatimes.com/business/india-business/aluminium-makers-send-sos-to-pmo-over-coal-shortage/articleshow/87317405.cms" target="_blank">According to the Aluminium Association of India, more than a two-hour power cut can force plant shutdowns</a> for six long months, leading to massive losses and job cuts. Commodities industries which are vulnerable to the power crisis include petroleum, steel, aluminum, meat, sugar, and others. &nbsp; </p><h4><strong>Exports outlook for the second half of 2021 – 22</strong></h4><p>Despite the challenges, Indian exporters are optimistic. Encouraged by a remarkable growth of 57.53 percent in merchandise exports in H1, 2021-22, Shaktivel said that the country is on course to achieving its $400 billion merchandise export target. &nbsp;He noted that crossing $197 billion in merchandise exports in the first six months of 2021 - 22 during these challenging times of the Coronavirus pandemic is spectacular performance. Shaktivel said recovering global economies, high order bookings for the forthcoming festive months, and supportive government policies are an impetus for exports. &nbsp;</p>

Can Indian Commodities Exports Grow in Future? 

<p>Almost two years since the coronavirus outbreak, international trade is still in troubled waters. After lockdowns and widespread economic distress in 2020, importers and exporters continue to deal with pandemic-induced supply chain disruptions on an unprecedented scale in 2021. This is largely due to record import volumes in the United States and Europe ahead of the Christmas-New Year holidays as well as a second round of lockdowns. The disruptions are expected to adversely impact import-export volumes and make<a href="https://www.bbc.com/news/explainers-53640249" rel="noopener noreferrer" target="_blank"> imported products costlier</a>.</p><p>Predicting a<a href="https://www.bbc.com/news/business-55237791" rel="noopener noreferrer" target="_blank"> 4.1% fall in maritime trade in 2020</a>, the UN Conference on Trade and Development has warned that the drop could be steeper in 2021 due to further supply chain disruptions.&nbsp;&nbsp;&nbsp;&nbsp;</p><p>This piece explains the current disruptions and how the shipping industry has been impacted.</p><p><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></p><h3><strong>Record Import Volumes&nbsp;</strong>‍</h3><p>What’s happening right now could be viewed as a perfect storm. Ports are overloaded, there aren’t enough containers and equipment to handle cargo, and freight rates have skyrocketed as a result. There are two main reasons for this state of affairs:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p><ul><li>A record spike in import volumes to the US and Europe from Asia. In October 2020, the<a href="https://www.freightwaves.com/news/port-of-long-beach-again-breaks-container-record" rel="noopener noreferrer" target="_blank"> Port of Long Beach</a> handled more than 800,000 twenty-foot equivalent units (TEUs) of cargo in a single month for the first time in its 109-year history. A month later, Chinese imports to the US<a href="https://www.freightwaves.com/news/port-of-long-beach-again-breaks-container-record" rel="noopener noreferrer" target="_blank"> increased 46% year-on-year</a>. There has been no let-up in container volumes this year as well. In the first nine months of 2021, the twin ports of Long Beach and Los Angeles dealt with<a href="https://www.nytimes.com/2021/10/31/business/economy/global-shipping-delays-shortages.html" rel="noopener noreferrer" target="_blank"> 15.3 million 20-foot containers</a>, a 25 percent increase from last year. Together, the ports handle<a href="https://www.nytimes.com/2021/10/31/business/economy/global-shipping-delays-shortages.html" rel="noopener noreferrer" target="_blank"> 40 percent of US-bound containers</a>. To deal with the record volumes, the ports are now<a href="https://www.nytimes.com/2021/10/31/business/economy/global-shipping-delays-shortages.html" rel="noopener noreferrer" target="_blank"> working round the clock</a>, with one Long Beach terminal open 24 hours. The shipping peak season, which comes before the holiday season, typically lasts from August to November. But this season is expected to stretch till<a href="https://apnews.com/article/business-global-trade-coronavirus-pandemic-china-united-states-76b934a5c6729de4466fc6ba89b4dcb2" rel="noopener noreferrer" target="_blank"> the Chinese New Year in February</a> and maybe more.</li><li>Booming e-commerce sales, with a pandemic-hit workforce taking to buying office and gym equipment for their homes. E-commerce accounts for a large volume of international freight. Around 25 percent more cargo was shipped from Asia to the US – the world’s second largest e-commerce market after China – in the first eight months of 2021 compared with the same period in 2019, according to<a href="https://www.bbc.com/news/58926842" rel="noopener noreferrer" target="_blank"> Container Trades Statistics</a>. Demand for consumer goods in the US has<a href="https://www.bbc.com/news/58926842" rel="noopener noreferrer" target="_blank"> jumped 22 percent</a> from February 2020 to August 2021, with a<a href="https://www.bbc.com/news/58926842" rel="noopener noreferrer" target="_blank"> 74 percent increase</a> in demand for imported toys, games, and sporting goods and a<a href="https://www.bbc.com/news/58926842" rel="noopener noreferrer" target="_blank"> 49 percent rise</a> for household appliances.</li></ul><h3>Current disruptions and how the shipping industry has been impacted</h3><p>Let’s take a look at each of the disruptions affecting import-export operations.<strong>&nbsp;</strong></p><h3><strong>1. Container Shortage and trade Imbalance</strong></h3><ul><li><strong>Asia out of containers: </strong>With most trade geared towards US and European shores, Asia is facing a crippling<a href="https://www.joc.com/article/asia-container-shortage-worsens-even-premium-services_20201104.html" target="_blank"> shortage of containers</a>. Importers are struggling to secure containers at Asian ports even on carriers offering premium services for premium rates. This shortage is mostly due to a pile-up of empty containers at US and European ports. According to a<a href="https://www.joc.com/article/asia-container-shortage-worsens-even-premium-services_20201104.html" target="_blank"> report</a> by The Journal of Commerce, containers are stacked five and six high – the maximum permissible limit – at Long Beach and Los Angeles. To ensure empty containers are returned quickly to Asia, carriers have reduced free storage time, cut back on extra free days and are rejecting export bookings. In the US, some exporters have said shipping lines are refusing to send containers inland to pick up cargo because they are in a rush to send the empty boxes back to Asia to take advantage of the export rush there.</li><li><strong>Chassis shortage in US:</strong> Due to the unavailability of 40-foot containers, most exports are leaving Asia in 20-foot containers. But US ports are terribly short on 20-foot chassis (trailers). This is because thousands of trailers bearing full container loads are waiting to be unloaded at ports, container yards and warehouses. In June 2021, the US government set up a<a href="https://public-inspection.federalregister.gov/2021-19974.pdf" rel="noopener noreferrer" target="_blank"> Supply Chain Disruptions Task Force</a> and<a href="https://public-inspection.federalregister.gov/2021-19974.pdf" rel="noopener noreferrer" target="_blank"> launched an inquiry</a> into the shortage of containers, chassis and other cargo-handling equipment.&nbsp;</li></ul><p><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/61977b597508480a1e6fffcb_Cogoport_2020_Trouble_Infographic%2019.11.21.jpg" alt="61977b597508480a1e6fffcb_Cogoport_2020_Trouble_Infographic%2019.11.21.jpg"></p><h3><strong>2. Port Congestion</strong></h3><p>Shipping lines might argue that they are unable to provide accurate information because their schedules are in a mess. One reason for this is congestion at ports.&nbsp;</p><ul><li>Ever since trade picked up in July-August after the initial lockdowns were lifted, ports have been handling large cargo volumes without let-up. They now have their hands full with holiday shipments. This is one reason for the pile up of containers.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li>At the same time, labour shortages due to Covid-19 persist. One shipping line pointed to a 10 to 13-day<a href="https://theloadstar.com/shippers-hit-lack-of-port-workers-and-containers-as-lines-add-congestion-surcharges/" rel="noopener noreferrer" target="_blank"> wait for vessels to berth at Auckland port</a> and blamed it on a lack of port workers.&nbsp;</li><li>The equipment imbalance has also contributed to port congestion.</li><li>In a vicious cycle, port congestion is leading to delays and extended wait times for ships, which in turn are adding to ports being overloaded. Thanks to congestion and delays, it now takes a container 70 days to get from Beijing to Chicago, more than double the normal 30-day period.</li><li>With winter setting in, cold season weather and storms have the potential to further hamper struggling port operations.</li></ul><p><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-1.png" width="auto" style="width: auto; height: auto;"></a></p><h3><strong>3. Carrier Schedules up in the Air</strong></h3><p>All this means carriers are struggling to keep to their schedules and are dealing with:&nbsp;&nbsp;&nbsp;</p><ul><li><strong>Blank sailings:</strong><a href="https://theloadstar.com/more-blank-sailings-as-hapag-lloyd-sets-new-asia-n-europe-freight-rate-record/" rel="noopener noreferrer" target="_blank">Blank sailings continue to be a routine feature in 2021. Recently, 2M alliance partners Maersk and MSC blanked sailings on the Asia-North Europe route over the September-October Golden Week holiday period<strong>. </strong>A blank sailing is one where the entire voyage or a part of it is cancelled.</a>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li><strong>Rolled cargo: </strong>The past year has seen an increase in carriers rolling over containers, which is when cargo fails to get loaded on a scheduled ship and is accommodated on a vessel that sails on a later date. Supply chain visibility provider Project44 reported<a href="https://theloadstar.com/another-new-normal-as-container-rollover-rates-continue-to-increase/" rel="noopener noreferrer" target="_blank"> rollover rates between 54 percent and 28 percent</a> for major shipping lines in April 2021 as well as <a href="https://theloadstar.com/another-new-normal-as-container-rollover-rates-continue-to-increase/" rel="noopener noreferrer" target="_blank">rollover rates exceeding 50 percent</a> at major transshipment ports<strong>. (</strong>A transshipment port is one where cargo is moved from one ship to another on route to its final destination.)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li><strong>Vessel bunching: </strong>This year, struggling ports have had to contend with another problem – vessel bunching, which is what happens when ships arrive back to back at port with little time separating each arrival. On 1 November, 2021, 53 ships were anchored off the Singapore port, which is 22 percent above normal, reported <em>Bloomberg</em>. Congestion rates were high at other Asian ports too – up 14.5% in Malaysia’s Port Klang, 6.7 percent in Jakarta’s Tanjung Priok, and 6.5 percent in Manila. On the same day, 79 ships were waiting to enter Long Beach and Los Angeles<strong>.</strong></li><li><strong>Vessel capacity: </strong>While ships on major routes are booked solid, some are still sailing with empty slots due to the container crunch.&nbsp;</li></ul><h3><strong>4. Shipping Charges Skyrocket</strong></h3><p>Carriers have responded to the strong consumer demand by increasing rates considerably and implementing a range of charges and surcharges. The fact that shipping company profits have <a href="https://qz.com/2060904/ports-are-a-mess-but-shipping-company-profits-are-at-record-highs" rel="noopener noreferrer" target="_blank">touched record highs</a> in the past two years have prompted shippers to accuse them of taking undue advantage of the situation.</p><ul><li><strong>Freight rates: </strong>In December 2020, freight rates were up<a href="https://www.hellenicshippingnews.com/container-freight-rates-surging-prices-support-scrap-challenge-rice-us-petrochemical-markets/" rel="noopener noreferrer" target="_blank"> more than 100 percent</a> from a few months ago on key routes. The pain continues in 2021. Shipping costs rose over 300 percent year-on-year this August. Despite a drop in the following months, they remain steep. Experts expect rates to stay elevated at least till mid-2022<strong>. </strong>Atmospheric freight rates aren’t limited to ocean liners. Air cargo rates recently<a href="https://theloadstar.com/air-cargo-rates-skyrocket-again-as-forwarders-scramble-for-capacity/" rel="noopener noreferrer" target="_blank"> went up 10-fold</a> in a single week.<a href="https://www.reuters.com/article/us-health-coronavirus-who-vaccines/air-freight-prices-outrageous-as-covid-19-shots-rolled-out-says-who-expert-idUSKBN28I2RM" rel="noopener noreferrer" target="_blank"> Truck/trailer rates</a> have also gone up due to a<a href="https://edition.cnn.com/2021/10/19/economy/trucking-short-drivers/index.html" rel="noopener noreferrer" target="_blank"> shortage of drivers</a> in some places such as the US.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li><strong>Peak season surcharge</strong>: Carriers are charging hefty <a href="https://theloadstar.com/squeeze-on-us-truck-capacity-and-lack-of-drivers-keeps-rates-high/" rel="noopener noreferrer" target="_blank">peak season surcharges</a> on key Asian routes. These charges are upwards of $10,000 on some routes<strong>. </strong>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li><strong>Congestion surcharge: </strong>As of 1 November, 2021,<a href="https://www.foxbusiness.com/economy/ports-of-long-beach-los-angeles-to-issue-surcharge-to-ocean-carriers-whose-cargo-lingers-at-terminals" rel="noopener noreferrer" target="_blank"> Long Beach and Los Angeles are fining carriers</a> for every import container that lingers at port for nine days or more. The charge is $100 per container, with an increase of $100 per container per day<strong>.</strong>&nbsp;&nbsp;&nbsp;</li><li><strong>Terminal handling charges: </strong>Air terminals have introduced new handling charges, including a<a href="https://theloadstar.com/peak-season-and-port-congestion-surcharges-spread-to-asian-tradelanes/" rel="noopener noreferrer" target="_blank"> $30.35 Covid charge</a> at Heathrow and a per-kilogram import fee for loose cargo.</li></ul><h2><strong>How SMEs can Weather the Storm</strong></h2><p>Trading amid such chaos can be a deal breaker for small and medium businesses. Some tips on how to make the best of a bad situation:</p><ul><li><a href="https://www.cogoport.com/blogs/shipping-delays-bad-for-business-why-it-pays-to-book-and-plan-early" rel="noopener noreferrer" target="_blank">Plan your shipment well in advance</a>. Add extra buffer time to account for delays, which are almost a certainty.&nbsp;</li><li>Ship from larger ports where the container shortage might be less severe. This isn’t a guarantee though, so study your options.</li><li>Compare at least a few freight quotes to make sure you get the best price. Try <a href="https://www.cogoport.com/blogs/shipping-delays-bad-for-business-why-it-pays-to-book-and-plan-early" rel="noopener noreferrer" target="_blank">Cogoport</a> for instant freight rates and quotes.</li><li>If you can afford it, book a premium service that guarantees equipment and ship space.</li><li>Budget for additional costs – <a href="https://www.cogoport.com" rel="noopener noreferrer" target="_blank">demurrage, detention</a> and <a href="https://www.cogoport.com/blogs/understanding-demurrage-and-detention-charges-and-how-to-avoid-them" rel="noopener noreferrer" target="_blank">port storage</a> – that can arise with delays.&nbsp;&nbsp;</li></ul><p>Communicate regularly with your trade partners. Try <a href="https://www.cogoport.com/blogs/understanding-demurrage-and-detention-charges-and-how-to-avoid-them" rel="noopener noreferrer" target="_blank">Cogoport</a> if you require the services of verified and trustworthy freight forwarders and customs agents.</p>

Covid 19: Shipment Delays & Container Shortage 

<p>Handling logistics can be a challenging job. These nine skills will help you ace the challenge.&nbsp;The job of an export/import manager anywhere in the world can be extremely challenging, more so if they work with small and medium enterprises or SMEs because these organisations tend to suffer from resource constraints.</p><p>Export/import managers may, for instance, often find themselves juggling an increasing number of tasks every day – planning&nbsp; and coordinating shipments and supervising delivery, managing customers and personnel and ensuring that shipments comply with domestic laws as well as international export, trade and financial laws.</p><p><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-1.png" width="auto" style="width: auto; height: auto;"></a></p><p>As is the case with any other job, having the right skills for all this work will not only help them complete it efficiently, it will ensure they grow professionally.</p><p>In this blog, we list nine skills – ranging from finance and technology skills to communication and interpersonal skills – that export/import managers must have or must develop to become better at their jobs. While some of these skills are specific to export/import managers, others are skills that anyone working in a professional space can use.</p><p>Life is all about continuous learning which is why we have included online links to tutorials and training wherever available. If you are an export or import or logistics manager or aspire to be one, we hope this blog inspires you to upgrade your <a href="https://www.muchskills.com/">skill sets or even learn new skills</a>.</p><h3>Here are the <strong>9 Skills to be a successful Export/Import manager</strong></h3><h3><strong>1. Understanding finance and budgets</strong></h3><p>Anyone in business must be financially savvy because that is the key to financial success, and this holds true for export/import managers too.</p><p>Among other financial skills, export/import managers must have the ability to understand accounting systems and contribute to the budgeting process.</p><p>Budgets are essentially spending plans that help businesses set goals and priorities for the financial year. Some responsibilities of export/import managers include drafting expenditure reports, helping determine budgets and ensuring that teams stick to approved budgets.</p><p>Financial skills are especially valuable for export/import managers working with small businesses because such organisations often operate on small budgets, and any deviations from approved budgets can hurt the business.<br></p><h3><strong>2. Understanding technology</strong></h3><p>Unless you’ve been living under a rock for the past two decades, you will be using basic technology such as laptops and desktops, smartphones, cloud platforms and web-based applications.</p><p>Among other things, technology has helped small businesses leverage capital efficiently, improve customer service, minimise costs by automating routine tasks, taking documentation online and accessing global markets. It has helped these organisations become more efficient and competitive.</p><p>As disruptions caused by the Covid-19 pandemic forces business worldwide to embrace technology or speed up their <a href="https://www.upstrategylab.com/blog/how-to-make-a-successful-digital-transformation">digital transformation</a> in order to survive, it is all the more important for SMEs to know how to leverage technology in order to stay relevant and competitive in a fast-changing world.</p><p>Export/import managers must be familiar with the following technology tools in particular:</p><ul><li><strong>Inventory management software:</strong> This software allows businesses to track stocks, plan production, procurement and sales and even prevent stock-outs or excess stocks. This helps to increase productivity, efficiency, improves cash flow and subsequently leads to cost savings.</li><li><strong>Project management tools:</strong> These tools help in planning and scheduling jobs to be done, collaboration with colleagues as well as hassle-free documentation and evaluation.</li></ul><p>Do check out our article,<a href="https://www.cogoport.com/blogs/6-digital-tools-to-make-your-daily-business-smarter"> <em>'6 digital tools to make your Import/Export business smarter'</em></a> for suggestions on technology tools that can help a small business operate more efficiently.</p><h3><strong>3. Understanding of international trade compliance requirements</strong></h3><p>Complex rules govern the import and export of goods between countries. Trade compliance is the process of understanding and conforming to the import and export laws and regulations of a country and any trade agreements it has signed.</p><p>In most organisations, trade compliance is the responsibility of the export/import manager. These managers need to ensure that they and other organisation employees are familiar with the country’s updated import and export laws and regulations. Failure to do so can result in audits, penalties, and inspections of shipments at the border all of which can prove costly in more ways than one. For instance, when shipments are held up at ports for inspection because of problems with documentation or suspected violation of trade compliance laws, besides the risk of penalties, these hold-ups can damage your relationship with your customer, hurting your business in the long run.</p><p><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></p><p>Just to give an example, Country A may decide it doesn’t want to export defence equipment to Country Z. When companies in Country A that manufacture this equipment go ahead and sell to Country Z because they are not aware of these restrictions, they can be slapped with heavy penalties.</p><p><strong>Want to learn more?</strong></p><p>Brush up on issues related to trade compliance by watching this series on YouTube:<a href="https://www.youtube.com/watch?v=ascBAoJg-GA"> Global Trade Compliance series</a></p><h3><strong>4. Networking skills</strong></h3><p>One of the responsibilities of an export/import manager is interacting with multiple stakeholders such as customers; vendors such as freight forwarders, transport service providers; and representatives of government agencies such as customs officials.</p><p>These relationships must be maintained and nurtured.</p><p>It is easy to connect with customers using social media platforms. Most of these platforms allow you to easily create a business profile that you can use to interact with customers. Similarly, an effective way to build networks with industry stakeholders and government agencies is to attend events such as conferences and fairs that these bodies organise.</p><p>Nurturing such relationships has various advantages. One, it builds customer loyalty and is a good way to attract new customers. Two, service providers and government officials you know personally may be more responsive to your needs if you run into problems during the export/import process. Three, you carry these relationships with you wherever you go, helping you build your career and reputation as an expert in export/import business. </p><h3><strong>5. Analytical skills</strong></h3><p>Every SME business wants to attract more customers and cut costs. Data analysis will help them do exactly that.</p><p>How is that possible, you may ask?</p><p>Businesses generate data every day as do entire industries. Analysing all this data can give businesses insights into customer behaviour as well as demands of domestic and international markets, allowing them to make more informed business decisions.</p><p>Data analytics has three key components: gathering data,&nbsp; analysing data, and obtaining insights from data.</p><p>Export/import managers, for instance, could gather and analyse existing customer data such as sales statistics to anticipate their needs – providing them exactly what they are looking for when they want it – increasing sales in the process.</p><p>Similarly, analysing trade data can give businesses insights into the demand and supply of goods and services across the world and also their movement. These insights could guide decisions related to production, procurement of raw materials from global supply chains. It can also help businesses decide which markets to target or even ways in which they can improve the product.</p><p>In our experience, owners of small businesses tend to think that larger businesses are best placed to benefit from data analysis. That is not true. The value of knowing the customer – one of the biggest benefits of data analysis – is important to every business regardless of size.</p><p><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></p><h3><strong>6. Accountability and adaptability</strong></h3><p>Accountability refers to the act of taking responsibility or ownership for your work, adaptability can be defined as a person’s ability or willingness to change their way of thinking or established processes to suit new or changed circumstances.</p><p>Both these skills are useful for export/import managers to have or develop. Accountability builds trust with people you interact with internally (such as team members) and externally (with clients, vendors, and representatives of government agencies). Similarly, a manager who is adaptable is better equipped to face challenges that their highly-stressful job throws at them.</p><p>In fact, a 2019 report in the<a href="https://www.bbc.com/worklife/article/20190718-adaptability-quotient"> BBC</a> said adaptability is one of the most important skills for a successful career. It said: “Rapid technological change means workers must keep learning, to the point where an ability to adapt – your adaptability quotient (AQ) – is becoming the X-factor for career success.”</p><h3><strong>7.</strong> <strong>Ability to receive feedback</strong></h3><p>Most businesses exist to bring value to the lives of a particular customer. Customer feedback therefore is very important and must always be heeded. An export/import manager closely works with customers and must not only have the ability to take any feedback positively but to also act on it.</p><p>Always keeping the customer at the centre will enhance your business’s reputation and lead to word-of-mouth sales too, which is great for business in the long run</p><p>An article titled<a href="https://www.logisticsmgmt.com/"> <em>Logistics Management Best Practices</em></a>, by PLS services, highlights why customers must be at the centre of anyone who works in the logistics industry. It says:</p><ul><li>70% of customers are willing to pay more for better customer service.</li><li>62% of B2B and 42% of B2C customers make future purchases with a company after they have a good buying experience.</li><li>66% of B2B and 52% of B2C customers stopped buying after a bad experience from the very first purchase.</li></ul><h3><strong>8. Communication skills</strong>&nbsp;</h3><p>An export/import manager has to deal with several stakeholders such as customers, transport service providers, government representatives and so on. Clear and concise communication is essential to avoid any misunderstandings with these people. Always ensure that those you deal with clearly understand what you mean and, most importantly, that you closely listen to and understand what others have to say.</p><p>Email serves as a great tool to maintain contact with the different stakeholder you connect with, and to build relationships with them. Read <a href="https://www.cogoport.com/blogs/write-emails-like-an-expert-to-grow-your-import-export-business" target="_blank">Write Emails Like An Expert To Grow Your Import-Export Business</a> for tips on using email in the most effective way.</p><h3><strong>9. Ability to handle stress</strong></h3><p>Export and import managers will often find themselves having to make quick decisions under stressful circumstances. For example, you might find that a shipment has been delayed, cargo has been damaged or payments haven’t been released according to schedule. All this can lead to a huge amount of stress for you and the customer and also requires quick decision-making about how you want to proceed. This is why the ability to take calm and measured decisions in the middle of a crisis is a valuable skill for an export/import manager to have.</p><h3><strong>Conclusion</strong></h3><p>Do remember that this list of skills and desirable qualities that export/import managers must have is not an exhaustive list but a guide for those of you who want to step up your game and build your reputation and career as an expert in the export/import or logistics industry.</p>

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