Since 1995, global trade volume and value have expanded by an average of 4% and 6%, respectively.
However, this growth is accompanied by a dynamic landscape influenced by geopolitics, trade routes, policies, and consumer habits. While offering opportunities, these factors also pose risks, emphasizing the need for constant vigilance and adaptation. The dynamic nature of global trade is why it is crucial for supply chains to adapt. Different supply chains will be impacted uniquely, meaning that adoption is mostly due to the style and nature of the supply chain operation.
Adaptation is critical, but it’s not enough. Successful adaptation to the current market realities hinges on leveraging the right tools and partners. Since the pandemic, global trade has experienced a shift like never before.
Recent geopolitical tensions have heavily impacted supply chains and shipping operations, making the choice of tools and partners even more crucial. This article explores global trade trends, technology’s role in facing them, and how Gemini Shippers can help.
Three Global Trade Trends to Watch
Global trade trends are common occurrences and activities shaping world trade. Although trends are dynamic and subject to constant change, these three have held on quite well in recent times, especially in the context of current geopolitical conflicts, sanctions, and risky trade routes.
Ongoing Disruptions Play a Major Role
Global trade is a $25.3 trillion market. Over 80% of these markets are facilitated across the ocean, especially when freight is moved across continents. Maritime movement is cheaper, and shippers can transport large cargo volumes on a single vessel. However, this mode of transportation is now fraught with disruptions and costly delays to the supply chain.
The disruptions are primarily due to geopolitical tensions, piracy and attacks from entities such as the Houthis, and economic sanctions levied on multiple key players in the global trade.
The result is longer trade routes, meaning longer shipping times, increased insurance and shipping costs, and, in many cases, loss of goods or theft. Other reasons for disruptions are supply chain bottlenecks such as port congestion, infrastructure failure, high cost of transportation and other supply chain processes, and transportation delays. The recent collapse of the Baltimore Bridge presented a major huddle for businesses and supply chain operations in the Upper Midwest region. The disruptions from that single incident continue to reverberate across supply chains today.
Nearshoring Boom Witnesses Continued Growth
Businesses are increasingly leveraging nearshoring to mitigate risks to their supply chains and circumvent some unfavorable factors, including import policies and trade wars. For instance, because of tariff hikes levied against China by the U.S., many companies are scrambling to find outsourcing alternatives outside China.
Because of this, there has been a nearshoring boom across global trade. It has allowed businesses to regionalize their supply chains by setting up factories in countries close to or constituting their market. These countries are usually friendly to these businesses and their country of origin. Upon setting up the factories, they transport raw materials to these factories, manufacture the products, and then ship them to the market without incurring additional charges due to the market’s proximity or favorable taxation treaties.
92% of U.S. manufacturing executives have considered nearshoring.
Nearshoring allows for lower wages, reduced cost of transportation, and reduced import duties on the finished products. The nearshoring boom is primarily because of trade wars, high import duties, and the need for market proximity to minimize the risk of supply chain disruptions. Although the concept is not new, it is now an increasingly common strategy for many Chinese businesses seeking to enter the U.S. market. With the extended trade wars between the countries, these businesses now use Mexico to access the U.S. market without being exposed to sanctions and increased levies.
The program is quite beneficial, as far as the Mexican government is concerned. Because of the nearshoring boom, they continue to see more factories built, resulting in higher employment numbers. The Mexican economy is booming, with it expected to grow at 3.5% annually at the back of U.S.-Mexican trade, which is anticipated to grow from $455 billion in 2023 to $609 billion by 2028. As long as the boom continues, Mexico will continue to consolidate its position as one of the largest trade partners of the U.S.
Digitalization Proves More Than a Trend
Between 2016 and December 2023, supply chain technology companies raised over $200 billion.
Technological advancements and an increased need for efficiency and transparency since the pandemic have caused havoc to global trade and have seen an increasingly digitized global trade. That is why digitalization is more than just a trend. Supply chains are leveraging it to ensure their shipping operations are highly optimized. This allows them to avoid potential risks that could derail shipping, seamlessly communicate with all stakeholders, including customers and shippers, and prevent errors that could be costly to the supply chain’s operations.
With continued innovation across supply chain and shipping operations, businesses can run with limited risks.
Global trade increasingly relies on technology solutions like blockchain, AI, and the Internet of Things (IoT) to ensure secure records and real-time tracking, accurate prediction of delays and task automation, and real-time information on location and temperature, allowing for more proactive responses throughout the global trade process.
Building Stability in a Dynamic Global Trade Environment
In a constantly evolving global trade landscape, it is essential to leverage the right partner to ensure stability.
Procurement Expertise for Stable Contracts
Gemini Shippers has a procurement expertise spanning over 100 years and a purchasing power allowing effective collective procurement.
The organization leverages both to secure stable contracts with global ocean carriers. This ensures locked-in vessel allocation and transportation rates, meaning that fluctuations in the global shipping market will have less of an impact on shippers’ business and supply chain. This allows for cost stability and predictability, even amid a disruptive global trading ecosystem. With stability in pricing and availability of ocean carriers, shippers can plan their supply chain budget more accurately.
Stable pricing is a welcome advantage for global supply chain operations, given the uncertainty of a dynamic trade environment.
Risk Mitigation Strategies
Global trade risks can be mitigated. With Gemini Shippers, supply chains and shippers have a resource that can assist them in developing and implementing effective risk mitigation strategies such as visibility and transparency throughout the shipping process.
Gemini Shippers leverages several proactive risk management strategies such as risk identification, assessment, management, and prioritization to develop contingency plans to minimize or completely eliminate the impact of these risks. By staying ahead of the challenges, Gemini Shippers provides its members and shippers with an environment that allows them to navigate these challenges more effectively.
All of this ensures operational stability in the face of uncertainty.
Digital Solutions for Enhanced Efficiency
In an age where technology advancements are constantly evolving and have become necessary for shipping operations, Gemini Shippers leverages them to provide digital solutions designed to enhance operational efficiency and boost transparency across the global trade process.
Some of these solutions are its data analytics system and the online portal, which comes with a plethora of tools designed to ensure a seamless shipping process and visibility. It comes well-equipped with a robust IT infrastructure management dashboard that serves as a control station, providing access to all parts of the system, a tracking and tracing system, and a rate auditing system. Equipped with these tools, shippers have real-time visibility into their cargo’s movement. By utilizing these digital solutions, shippers can streamline their entire logistics operations.
It allows for stability in shipping operations by improving communication with carriers and responding quickly to changing market conditions.
Gemini Shippers is Here to Help
Global trade is constantly evolving, and global trends are continually shifting.
In a dynamic landscape, there is a unique need for stability. And that is what Gemini Shippers provides to its members. With the organization, there is seldom a need to explore other risky and unproven cost-cutting strategies. Gemini Shippers allows access to state-of-the-art technology and collective procurement, ensuring all members have a seamless shipping experience.
Want to leverage the Gemini Shippers platform? Join Gemini shippers today.
