What Is Global Trade Management? A Definition

What Is Global Trade Management?

Global trade management is a set of processes and practices, often supported by software, that help companies navigate the complexities of international trade. Global trade management requires a nuanced understanding of international regulations, supply chain logistics, and market dynamics.

Global Trade Management Explained

Global trade has exploded over the past hundred years, particularly in the aftermath of World War II and the establishment of increasingly open trade policies worldwide. As globalization increased in the 1990s and 2000s, many countries found that important domestic industries, particularly agriculture and manufacturing, were threatened by foreign competitors.

This trend was amplified by the growth of digital services, which upended industries such as entertainment and communications that had previously been insulated from such disruption. The advent of US-based streaming services, in particular, has given consumers greater control over which content they consume, when they consume it, and on which devices. This competition has been especially painful for traditional broadcasters worldwide.

As popular discontent with these upheavals has grown, countries and trading blocs have reacted by enacting protectionist laws and regulations. Those measures have included tariffs on certain classes of imported goods, in part to counteract what some authorities saw as unfair government subsidies of foreign competitors. Some countries have set import quotas to limit the number of products in a particular industry that could be imported over a designated period of time. The aforementioned government subsidies are another form of protectionism. Critics of the General Data Protection Regulation (GDPR), enacted in 2018 by the European Union to ensure the privacy and security of citizens’ personal data, see that legislation as protectionist to the extent that it makes it difficult for digital media companies to offer the types of targeted messaging that their customers need to justify spending their ad dollars with them.

These types of constraints on trade are nothing new, but they have become more complex as more types of trades have emerged (cross-border cryptocurrency trade, for example). As a result, businesses need systems to help manage these complexities.

Among the capabilities of the best global trade management applications, which often are modules of supply chain management suites, is export screening, which helps shipments clear customs more quickly and helps exporters spot compliance issues before they stop shipments in their tracks. This, in turn, helps reduce order-to-cash cycle times and minimizes the impact on revenue.

Another key feature of this software is the ability to provide clear visibility into all-in costs, including transportation fees, duties, and insurance. The software automates the recording of actual costs, including product pricing and discounts.

Compliance with global trade regulations is another area where global trade management systems play a key role. By automating compliance checks and centralizing information, these systems reduce the risk of fines and other legal issues. Global trade management systems also provide visibility into supply chain disruptions and alternative sourcing options; help companies obtain trade financing, such as letters of credit; and build in data analytics to, for example, help companies monitor exchange rates and reduce their currency risk.