International trade is never at a standstill and is constantly affected by various factors.
As the world steadily recovers post pandemic, other factors such as China’s rise, diversification, technological developments, and sustainability efforts also has a significant the impact of geopolitical conflict in one region of the world reverberates and sends shock ripples to the rest of the world – impacted the logistics and supply chain management, the availability of raw material and the price of goods.
Businesses in New Zealand that deal with exporting products overseas need to keep abreast of the changes that are happening in order to be on the right side of them. Read on to explore the trends that are shaping the future of supply chain management and what the future holds for international trade.
What are some key factors that will affect international trade?
1. China is the world’s second biggest importer
China is emerging as the largest importer of goods, following closely behind the United States. With its sheer size and population, there is a chance that it will become the biggest importer in the world. This means greater trade opportunities for businesses in New Zealand to export to China.
The New Zealand-China Free Trade Agreement (NZCFTA), which entered into force in 2008, has facilitated trade between the two countries. According to Anadolu Agency, goods and services reached US$21.5 billion in 2021. The upgrade to the NZCFTA in early 2022 has further reduced red tape, reduced tariff rates and introduce better tariff conditions for important sectors, like wood and paper products, as stated by New Zealand Foreign Affairs & Trade. The upgrade also aims to promote e-commerce by building in transparency into the process and putting measures in place that protects shoppers
2. Diversification of the supply chain
The pandemic also affected the shipping and logistics industry with the restrictions causing a reduction in flights, which, in turn, caused a spike in the cost of air freight. Consequently, shipping rates soared. These problems have driven businesses to change their supply chain strategy by diversifying logistics and supply chain management. World trade is moving towards a broader range of emerging manufacturing hubs in Asia that offer the added advantage of world-class IT infrastructures, according to Bangkok Post.
3. Digitisation and automation
The pandemic gave rise to a new digital age where a significant number of customers started shopping online and e-commerce. This shift calls for businesses worldwide to move towards e-commerce and digitisation of their processes, which will result in lower costs associated with foreign trade. It will also improve the efficiency of the supply chain as digital platforms worldwide will keep goods moving in a transparent and traceable manner.
Another step toward digitization in the supply chain is to use technology to track and trace inventory and goods along each step of the chain. Blockchain technology has been revolutionary in logistics, offering highly secure, traceable, and transparent processes which are visible in real-time to all stakeholders. DHL aims to embrace blockchain technology to improve transparency and traceability in supply chains and automate commercial processes.
4. Ramping up sustainability efforts
78% of US consumers surveyed declared that a sustainable lifestyle is important to them, as shown by a NielsenIQ survey. With rising temperatures around the world, extreme weather and sea levels inching higher, the urgency of addressing climate change has never been more apparent than now. Nations around the world are pledging to reduce their carbon emissions. The United Nations Climate Change Conference COP27 concluded in November 2022 with the decision to provide funding for countries most vulnerable to climate change disasters. UN’s 26th Climate Change Conference of the Parties (COP26) saw countries setting ambitious targets to wean off coal, embrace renewables and reach net zero by 2050.
Sustainability efforts are, hence, shaping how international business and trade will be carried out in the future. From raw material procurement to last-mile delivery to the customer all stakeholders from the different types of international trade will need to make sustainable efforts to be a part of world trade. By partnering with a third-party logistics company, like DHL Express, that pioneers green logistics, businesses can meet their supply chain sustainability goals.
