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Strategic Analysis of the European Trade Compliance Management Services Markets
Frost & Sullivan, Sep 2005
Increasing Dependence on Globalisation and Long-distance Supply Networks Augment the Need for Trade Compliance Management Services
Managing trade compliance issues is becoming increasingly complex with European 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 account of these long-distance supply chains. Shippers are steadily realising that tapping the ‘connected’ resources of third parties, such as logistics service providers (LSPs), trade content managers and consultancies, assists them in smoothly managing trade movements across borders without losing sight of their primary objectives. Companies are recognizing the benefits of effective trade compliance management and the resultant focus could 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.
This Frost & Sullivan strategic analysis service examines the European trade compliance management services markets. It segments the market by product type into trade content services, supply chain software solutions, application service protocol (ASPs) and software platforms, trade management consulting and logistics services. The study explores the market’s status, competitive environment, range of services and the inherent opportunities for growth. It also charts a roadmap for this market from its origins as fragmented services and delves into the total trade management process.
New Regulations in Europe Drive Companies to Automate ‘Paper Processes’ to Meet Compliance Requirements
Shippers are under pressure from the European Union (EU) to align their trade compliance management processes with mandatory requirements that are expected to be developed by the next decade. This complexity in compliance is fuelled by the dynamic shifts in the rules and regulations of global trade across different European countries with very diverse norms for classification of products. Even though 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 as well as facilitate the flow of information and physical goods, it is imperative that shippers efficiently manage their trade processes. Although 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 options of automating their supply chain processes, says Sharat Satyanarayana, the analyst of this study. After 2010, most companies’ trade information for various operational destinations is expected to be automated and provided with precision and security.
Market Entry of Logistics Service Providers to Drive Revenue Growth
The market revenues are likely to double by 2012 because of the entry of LSPs, offering comprehensive trade compliance management services to their client base. The inclusion of trade compliance management services in the regular portfolio of third-party services for supply chain management is expected to further drive the market.
Moreover, U.S.-based companies that have started their operations in Europe are driving awareness and demand for comprehensive trade compliance management services, notes Satyanarayana. This move is expected to open up several additional revenue streams in the market.
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