International Network

Custom strategies for Purchasing and Logistics
10/15 2019 // International

Custom strategies for Purchasing and Logistics

Photo: Frank Rösch, BME e.V.

The BME's 2nd Customs & Trade Summit dealt this year with current trends in customs and export control law as well as their effects on purchasing and logistics. The two-day specialist event also shed light on the opportunities and risks in the procurement markets of the USA, China and Japan.

The crucial topics of the 2nd BME Customs & Trade Summit* in Darmstadt were Purchasing and Logistics as partners of customs and export control, digital customs management of purchasing, as well as business-oriented sourcing strategies, taking into account customs and export control.

On Wednesday in his statement on the opening of the second day of the event, Kevin Heidenreich, Head of the Department of International Relations of DIHK, first drew attention to purchasing decisions between risk and opportunity. More and more German companies are complaining about growing risks for the global economy and the negative effects on their own business. According to recent survey results among German chambers of commerce, delegations and representative offices, 51% named the economic policy framework as one of the biggest risks for global business. The lack of specialists, the exchange rate between the euro and US dollar, and the growing barriers to trade were found to be critical as well, added Heidenreich.

 German companies are also worried about the continuing uncertainty about Britain's exit from the EU. Heidenreich advised local companies with British business activities to keep an eye on existing and possibly new tariffs or customs procedures. Companies are also well advised to adjust to disruptions in aviation in the event of Brexit. Another hint from the DIHK Brexit checklist was that current and future contracts with UK business partners should be reviewed and, in the event of Brexit, clauses included.

Oliver Wieck, Secretary General of the International Chamber of Commerce (ICC), addressed the new Incoterms rules, which apply from 2020. As you may know, these lay down the rights and obligations of contracting parties when delivering goods. The new Incoterms also regulate the transfer of price and property risk from the seller to the buyer, as well as any insurance obligations. Wieck recommended the participants of the two-day BME specialist event to use the new rules and regulations that come into effect on 1 January 2020. The Incoterms rules, otherwise known as the International Commercial Terms, are globally applicable standards for delivery conditions in international transactions. They regulate the rights and duties of buyers and sellers concerning the delivery of a product: When do the goods go from the seller to the buyer, who bears which transport costs, who assumes liability for the loss or damage of the goods and/or insurance costs? Clauses such as the specification of goods, the violation of contractors’ obligations, the transport of the goods and whether there is even a contract of sale were not previously regulated by the Incoterms clauses.

"Restrictive measures or sanctions are an important instrument of the EU Common Foreign and Security Policy. They aim to effect a change in the policy or action of those against whom the measures are directed," said lawyer Philipp Weber-Lortsch, Senior Manager of the Deloitte GmbH auditing company. Whether and to what extent the company is affected by sanctions regimes depends on its specific risk profile. These include, among other things, the number of business partners and their turnover, the business relationships with critical countries, the frequency of international transactions or payment methods.

Weber-Lortsch also presented the participants of this year's Summit with the criminal and regulatory consequences of violations of EU sanction law. In the event of wilful misconduct, imprisonment of between three months and 15 years is prescribed, and in the case of negligent infringement, a fine of up to EUR 500,000.

Silvia Glas, Manager of Purchasing Supply Chain Management at Panasonic Electric Works Europe AG, spoke about the opportunities and risks of the Japanese procurement market in his keynote speech. Japan was the best-cost country among German buyers. The country is the world's third largest economy after the US and China. At first sight, it does not offer the locational advantages of so-called low-cost countries. Nevertheless, Japan has a lot to offer. For example, the share of investment in research and development is high. Japan also has strong technological expertise, high-performance suppliers and could score points, especially among German buyers, with interesting high-tech industries such as the automotive, robotics, display and LED technology industries.

Negative factors suggest, however, that labour costs in Japan remain high and industrial procurement is expensive. Due to demographic change, there is also a shortage of skilled workers in Japan. The supply chains are usually rigid, and direct contacts with foreign customers, especially for Japanese SMEs, are often new territory. In addition, earthquakes, tsunamis and typhoons hamper the business activities of domestic and foreign companies. Nevertheless, entry into this market, which is characterized by innovative suppliers, high standards and technical precision, is worthwhile. Additional momentum in economic relations between the EU and Japan could be provided by the JEFTA Free Trade Agreement, which entered into force on 1 February 2019.

Finally, Glas advised the approximately 50 purchasing and logistics managers present about possible Japanese business: "Avoiding risks and seizing opportunities!"

* From the 2nd BME Customs & Trade Summit in Darmstadt, reported by Frank Rösch, BME.


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