Trade compliance management services boom

Trade compliance management services market set to boom in Europe with US companies expanding into the region, creating awareness and demand for the services, says report.

Trade compliance management services market set to boom in Europe with US companies expanding into the region, creating awareness and demand for the services, says report.

Cross-border trade, it is vital for companies to have considerable knowledge about trade processes to better manage their resources and reduce supply chain bottlenecks.

US companies are especially aware of this need and hence, give priority to trade compliance.

With several US companies expanding into Europe, the local participants are also being introduced to this business culture.

This trend is driving logistics service providers (LSPs) to re-evaluate their strategy for providing better value-added services and retain their customer base.

Service providers in this $4.60 billion market will have to intensify their efforts to educate companies about the criticality of outsourcing trade compliance management services.

They have to promote their capabilities and their value-added services for shippers from Europe to take interest in them.

Managing trade compliance issues is becoming increasingly complex with companies' need to integrate information from different global trading destinations and comply with a diverse range of government trade and security procedures.

Moreover, they also have to keep tabs on long-distance supply chains.

Shippers are steadily realising that tapping the 'connected' resources of third parties such as LSPs, trade content managers and consultancies assists them in smoothly managing trade movements across borders, instead of spreading their focus thin over numerous issues.

"Service providers can drive the uptake of their solutions by approaching existing customers with value-added services in partnership with trade content/knowledge providers as well as application platforms and software providers," says Sharat Satyanarayana, senior research analyst with Frost and Sullivan.

Companies are recognizing the benefits of effective trade compliance management and this focus can be a crucial differentiator in any business.

While larger companies can leverage it to stay competitive, small- and medium-sized enterprises can use it to overcome entry barriers and stay afloat.

Moreover, shippers are under pressure from the European Union (EU) to align their trade compliance management processes with mandatory requirements that will be developed by the next decade.

The dynamic shifts in the rules and regulations of global trade across different European countries with diverse norms for classification of products is fuelling this complexity in compliance.

Although the EU is seeking to standardise its numerous trade requirements and procedures, many countries still have a significantly long list of distinct needs.

For example, these countries have distinct and detailed regulations for the transportation of hazardous chemicals or electronic/high-tech goods.

To adhere to such complex procedures and facilitate the flow of information and physical goods it is imperative that shippers efficiently manage their trade processes.

Even though most companies still follow the 'paper method' of managing their trade documentation and other processes, greater awareness about automation is changing this trend.

"Many organisations are on the path to developing strategic relations with LSPs and are exploring the option of automating their supply chain processes," notes Satyanarayana.

"By 2010, the market is expected to touch $8.89 billion in revenues, since most companies' trade information for various operational destinations might be automated and provided with precision and security." LSPs are anticipated to control the bulk of market shares by the early part of the next decade.

With their stronger presence and interactive relations with various government agencies, LSPs are poised to surge ahead in the market for trade compliance management services.

* Title: 'Strategic Analysis of the European Trade Compliance Management Services Market'.

Code: B556-18.

* About Frost and Sullivan - Frost and Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years.

The company's industry expertise integrates growth consulting, growth partnership services and corporate management training to identify and develop opportunities.

Frost and Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community, by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics.

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