Chain of Thought

Your Company's Reputation is in Your Hands

Exports seem to be the silver lining in the dark cloud that is the U.S. economy. According to the U.S. Dept. of Commerce Bureau of Economic Analysis, the U.S. exported a record $178 billion in goods and services in July. Over the last 12 months to the beginning of September exports totaled just over $2 trillion. That's 27.3% higher than the number for 2009.

An article in the Wall Street Journal commented that at this pace the U.S. is set to meet its goal to double exports by 2014 as established by President Obama in his 2010 State of the Union address.

That article appeared the same day I read a white paper from Kewill Inc. on Global Trade Management Best Practices which presented results of a survey the company did. It introduces a few stray clouds into this sunny picture.

While the vast majority of respondents to Kewill's survey export products internationally, more than half (58%) do zero to 1,000 export shipments per year, which is less than an average of 100 shipments per month. Twenty percent of the respondents do between 1001-5000 exports shipments annually. The study's authors think this is still a small number and that if companies start living up to President Obama's goals they may be in for a rude awakening.

One reason the respondents exports are so low could be that many companies are shipping their products directly from contract manufacturing operations. That raises a challenge if they do increase exports because chances are they don't have sufficient visibility of those shipments—which they'll need if they are to comply with requirements for maintaining the quality of trade data provided to government authorities for shipments from their contract manufacturers.

“While the exporter of record is likely to be the contract manufacturer, the brand name of the products is quite evident and inaccurate declarations should pose a concern for the companies who own the brand,” the white paper states. “Companies are still not making changes in business processes despite increases in penalties or fines for non-compliance.”

That might be because they know compliance enforcement is understaffed and under-funded by the agencies responsible for export controls and these shippers are trying to fly under that radar screen. That complacency is dangerous, considering that in November 2010, the President signed an executive order to increase coordination among export control enforcement agencies. The order mandates the participation of BIS, the Federal Bureau of Investigation, military security agencies, Immigration and Customs Enforcement, and the Intelligence Community in an Export Enforcement Coordination Center to share information and leverage resources. This will enable these agencies to increase enforcement.

So, if your company is looking to diversify its revenue streams by growing its global business, now would be a good time to look at how well you are helping it comply with those regulations. The white paper warns that BIS is adjusting how it penalizes those who violate U.S. export controls. If it determines that a violation is deliberate, penalties are more likely. That could mean heavy fines, imprisonment, and/or the denial of export privileges—as well as actions against the company.

The enhanced visibility of the role of material handling and logistics professionals can be a mixed blessing. Yes, you're getting more strategically important to your company, but with that importance comes more responsibility. Increasingly, the public image of your company is in your hands. As your company goes global, so does that image. For your career's sake, make it look good.

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