Category Archives: Global Trade

Fujitsu is Launching a Blockchain Money Transfer Service

Which is a step in the right direction, but it’s not enough.

As per a recent article, Fujitsu Eyes Cryptocurrency Trading with Cross-Blockchain Payments Tech. The goal of the platform is to allow two different cryptocurrency networks to interoperate.

Interoperable networks are the future of supply chain, as per a recent article on we need blockchain, but not for the reasons you think, as, implemented properly, it could allow supply chain partners on different platforms to securely, but openly, trade information that multiple partners need access to in an unalterable way.

But that, of course, is easier said than done. Company X might post that it has a 10 Million Renminbi receivable in China that it wants to trade for a 1.5 Million USD receivable in the USA, but even if that is the exact exchange rate, are the two debts equal? Only if both parties can, and will, pay the same amount at the same time. If one debt is due now and one is due in 30 days, there is a cost of capital if one organization has to borrow in the interim to meet cashflow requirements. Also, if both debts are due in 30 days, something could happen within 30 days that would result in one organization being unable to pay its debt for 60 days, and this again could result in a cashflow issue for one party that traded a debt.

As a result, unless both parties pay into a network and the funds can be immediately transferred, then you need a network where parties are trading at negotiated discount rates (subject to credit ratings or other agreed upon factors), and that could get tricky.

We could be left with a situation where each IOU is auctioned off to the highest bidder in one of the counter-party currencies of choice (1.4M USD, 1.0M British Pounds, etc) or the situation where each block is put up with a (set of) offer requirement(s) and the first offer takes it. In the first situation, which requires a fixed time auction over block chain, you have a lot of overhead (and blockchain’s primary application — bitcoin — already takes too much energy), and the second case this could leave trade possibilities on the table.

Unless a truly global currency facilitation fund where a number of entities establish a global bank, each funding in their own currency, and agree to pay out debts in the local currency in an established timeline for each IOU placed on the network, the dream could stay that, a dream. But with a global organization, the global organization would do its own risk checks, insure the risk is acceptable, and then take a cut just like supplier networks and payment networks take a cut. It would be like a bank or an invoice factoring network, but could offer lower costs as it wouldn’t need to exchange currency all the time, could weather currency storms, minimize global transfer (and global transfer costs), and generally improve global trade efficiencies. Just like the Knight’s Templar did when they effectively established one of the first global banks.

What we’re asking is not an easy network to design, but one we need to be thinking about.

Supply Chains Are Complex … and the Earth is Round.

Hey, some of you might not know the earth is round! It’s only been 70 years since the first pictures of earth were taken from an altitude greater than 100 miles in space (and, up until that time, the non-believers could demand visual proof)! (To be precise, the first pictures of Earth as seen from an altitude above 100 miles was on March 7, 1947. Source: NASA)

But to not know that supply chains are complex, when “global” trade is almost as old as civilization (as purchasing is, of course, the world’s second oldest profession until such time as someone can definitely prove astronomy came first), that’s, well, really unthinkable. But yet, APICS and Michigan State University just gave us yet another report that announced yet again that supply chain leaders are citing “complexity” as the top supply chain challenge. Moreover, they decided to dive into the sources of complexity and found, surprise, surprise that they are:

  • customer accommodation
  • operations globalization
  • supplier (local sourcing) complexity
  • supply chain trends

But there’s nothing new here either. Let’s take ‘em one by one.

The number of variations of a product desired is equal to the number of customers you ask. Period. Has always been. Has always will be — so the more customers you try to accommodate, the more complex your product variations, and supporting supply chain, becomes. And we’ve known this since long before Marshall M. Kirkman wrote the first Purchasing Manual.

Of course the supply chain becomes more complex as you go more global. Every locale has the potential to add languages, currencies, culture, local regulatory requirements, logistics challenges, border challenges, and so on and so on.

And then there are all the local issues faces by the suppliers — additional regulatory requirements, sustainability and CSR efforts to stay off of boycott lists, local workforce challenges, local disruption and disaster risks, and so on.

And of course trends affect complexity. They are usually the source … but they are not new issue. As we laid bare in our “future trend expose”, of the 33 trends commonly cited as future trends, only 3 were really relatively new, and only 1 was really a future trend.

Complexity has always been here, and the more global we get, the more complex we get. Nothing has changed, and if it’s not completely obvious at this point, you’re in the wrong profession.

That’s why SI has been preaching optimization and analytics since day one, since those are the only advanced sourcing solutions that can really handle the complexity of modern supply chains.

Procurement Does Need to Worry About Mexico …

In a recent post over on Spend Matters, we were given 3 Reasons Why Procurement Needs to Worry About Mexico. Namely, the facts that:

  • Trump could rewrite, or rescind, trade agreements
  • Financial Barriers could come in many forms and firewall trade
  • Internal unrest (due to rising gas prices, etc.) could disrupt supply

All of these could cause chaos for Mexican dependent supply chains. But this could open up opportunities. Let’s take them one by one

No trade agreement? No problem. Tax hikes can go both ways. The US will impose import quotas and high duties. But so will Mexico, because there will be no reason not too. Sure, the US might buy more from Mexico than Mexico buys from the US, and it might hurt Mexico, but if trade agreements are torn down, it’s not just Mexico that will suffer in this way, and retaliate. As a result, there will be opportunities to sell into other countries. It just takes contingency planning. Start now!

Financial barriers can come from any direction at any time. This is just a reality of global supply chains. Leading supply chains are always monitoring global trade regulations, current and forthcoming duties, new rulings, exchange rates, and other financial barriers — and incentives — and have backup plans to take advantage of changes, and avoid penalties, when necessary. Every barrier that is raised is typically followed by a barrier that is taken down somewhere else by another party looking to take advantage of the shake-up. Those who monitor their global operations will find another door opening for every door that closes.

Mexico, like many countries, has a history of unrest — and a history of dealing with it. This is likely an issue that is being blown out of proportion. It’s true that the unrest, and disruptions, could get worse before they get better, but they are not likely to bring the country to its knees or cause any significant or long-term damage to your supply chain. Basically, it’s just a matter of monitoring for potentially disruptive events, which is something a leading Procurement organization should be doing anyway, and taking preventative action upon the identification of a potentially disruptive event.

In other words, given that an organization, in response to these potential threats, should be:

  • exploring global options,
  • monitoring global tariffs, taxes, exchange rates, and coming changes, and
  • monitoring current events that could potentially impact the organization’s supply chain

the organization can use this to their advantage and identify new global markets before their competitors, take advantages of differences in tariffs and exchange rates to lower costs, and shift supply to backup locations when a primary location is affected, or about to be affected, by an external event. So, Procurement can worry about Mexico, or use it as the reason to finally implement supply chain monitoring, and benefit from that decision.

Twenty Score and Sixteen Years Ago Today …

… the British East India Company, which would grow in size until it accounted for half of the world’s trade, was chartered. While it hasn’t been in existence for 142 years, it made Britain a trading superpower and with the other East India Companies (Dutch, Portuguese), basically defined global trade for centuries.

The wikipedia article alone is a fascinating read, and links to many more resources for those who want a historical trade understanding.

What do you think LOLCat?

LOLCat, technically, as they were chartered, they weren’t pirates.

LOLCat seems to disagree …

Freightos: Still Flippin’ Freight Quotes Faster than a Fleet-Footed Feline on Guarana

When we last checked in on Freightos a year ago, they were serving up real-time freight quotes for global shipping and were just launching the marketplace where buyers could search by “lane”, see public freight quotes from shippers serving those “lanes”, compare them, and book quotes. (And a buyer can define a lane by zip code or city, and the software will automatically identify all relevant [air]ports.) Since then, the Freightos marketplace has been growing, and a few noticeable improvements have been made:

More, and bigger, carriers.

Now that big global companies have publicly announced their adoption of the platform — including Sysco, Marks & Spencer, and Panasonic US — bigger forwarders and carriers are signing up and there are a plethora of good, competitive, economical options for all major lanes between Asia and North America — which includes complete multi-modal options from just about any zip code to any zip code in the regions of interest (and almost all major ports and major distribution centers are covered).

More refined cost tracking and rate comparison. 

Upon launch, Freightos provided buying organizations the ability to upload all of their contracts and associated rates. The UI has been improved and it’s easy to compare the contract rate against the current market rate of a carrier as well as the market rates of other carriers side-by-side and to see the relative delivery times that correspond to the rates. (The models break down the cost and delivery time component of each leg of the journey. Truck to port, ocean or air cargo from port to port, truck to distribution center, etc.)

The detail provided on quote breakdown is incredible compared to most platforms that simply collect an all-in-one delivery free for each segment and the government tariff rate(s). If relevant, the platform will break out delivery fee (per unit), fuel surcharges, messenger charges, e-document charges (at origin and destination), lift gate charges, manifest system charges, customs charges, each export and import tariff, SOLAS administration fees, docking fees, temporary storage fees, freight station fees, pier pass fees, cleaning fes, chasis fees, handling fees, and local charges.

Immediate Online Payment with Booking

Since Freightos can now collect payment immediately upon booking through the marketplace, this provides two major advantages over the initial version of the platform where a buyer requested a quote, a supplier replied, and then a booking was made at a later time. The buyer gets the booking they need when they need it, no fear of the lowest cost or preferred carrier maxing their quota (and the option disappearing because someone else selects and pays first). Secondly, since all marketplace payments flow through the platform, Freightos is able to offer the service free for buyers and at a low cost to service providers, who pay a small transaction fee (which should cost them much less than it does to hire multiple sales people to respond to offline RFQs all day with the same quotes cut-and-pasted into multiple Excel sheets of various formats).

More Powerful and More Responsive Drill Down Filters

Not only can you select/deselect ports, modes, forwarders/carriers, intermediate routings, and intermediate ports/distribution centers, you can also include or exclude additional requirements such as lift gate, cross-docking, etc. in your search and comparison. The platform is effectively doing hundreds of searches across (potentially) thousands of carriers with dozens of options in real-time.

Streamlined Document Management

The platform can store, index, and cross reference all contracts and documents (such as insurance certificates, compliance certificates, etc.) related to all carriers used by an organization and they can be easily retrieved when a quote is accessed or easily managed through a carrier management interface.

A Full Featured API

You can include the power of their marketplace in your sourcing application. You don’t have to use their web-interface, you can embed the search functionality in any platform you are currently using to get worldwide shipping estimates and available carriers in real-time.

Freightos is getting very close to becoming the powerful freight management solution that will not only be Supply Management’s best friend but the default platform for all logistics tenders and spot buys performed by the organization. Stay tuned. We’re sure we will be hearing more from Freightos in 2017.