Cost of trade set to become bigger burden to supply chains in 2020
More than two thirds of supply chain leaders believe that costs are going to rise
According to eft’s Supply Chain Hot Trends Report: 2020 & Beyond report, 68% of Logistics Service Providers expect barriers to trade to continue to be an issue across 2020 and drive up costs, despite some of the recent progress in trade negotiations.
Costs of customs compliance emerged as the primary cross-border concern for supply chains executives in the survey, with 42% nothing this as their primary issue. This is only set to increase in the coming years, as e-commerce becomes more important and already cross-border e-commerce sales make up 20% of sales for retailers, brands and manufacturers featured in the survey.
A lower tier of concerns for supply chain professionals includes managing customer expectations, negotiating returns, dealing with risk issues and the problem of low data visibility across borders.
These concerns come despite some expected improvements in cross-border trade in 2020, with a softening of stances and limited progress in US-China negotiations, the arrival of the USMCA agreement and the beginning of a free trade agreement between the EU and Japan.
There still remains the lack of resolution in Brexit trade negotiations and the enforcement of new emissions standards for ships is also expected to create an uplift in the cost of shipping. Current estimates point to a medium-term rise of 10% to 20%, with most of these increases yet to be priced in. However, extreme softness in demand for international shipping may help to dampen this, as coronavirus at the start of 2020 has put a lot of downward pressure on shipping rates due to overcapacity.
For more on the trend shaping logistics in 2020, click here to download the report for free.