Despite ongoing pandemic-related restrictions, U.S businesses have a positive outlook toward international trade and travel this year, according to a new report released on March 11.
However, the recovery they predict depends on robust international flows of trade, people, information and capital, according to a survey based on the DHL Global Connectedness Index.
DHL found that while the public health crisis created unforeseen challenges and disrupted travel, U.S. businesses remain dependent on integration with international markets and would like to expand the international flow of trade to regain economic momentum. Key findings include:
- Almost three-quarters of respondents (74%) reported their organization is extremely or very dependent on internationally based business partners.
- Nearly 9 out 10 decision-makers (89%) said that their organization’s economic recovery will rely upon robust international flows of trade over the next 12 months.
- An overwhelming majority of respondents (81%) believe their organization’s profitability would increase if the U.S. were to move away from some of the protectionist trade policies of recent years.
“The ability to do business internationally has been crucial to the success of many organizations for a very long time now, and this has only been enhanced by major leaps forward in areas such as technology and trace,"said Mike Parra, CEO, DHL Express Americas said in a statement. " The dynamic growth of e-commerce and the way in which it has given entrepreneurs access to a global customer base has demonstrated this,” said Mike Parra, CEO, DHL Express Americas.
Corporate America Keen to Build More Resilient Supply Chains
With the resurgence of COVID-19 cases in the fourth quarter of last year and a number of virus variants active, U.S. businesses will continue to navigate the precarious waters of the pandemic for the remainder of 2021. For companies that source or operate in international markets, particularly with lean supply chains or a concentrated reliance on particular suppliers, the pandemic has amplified risks related to disruption. More than six out of 10 surveyed (63%) responded that COVID-related lockdowns surpass all other concerns.
The research found that technology, such as automation and risk-monitoring tools, is a lifeline, allowing organizations to scale and transform their operations as the crisis has evolved. Over half of respondents (54%) said they have increased use of digital tools and identified alternative suppliers in current geographies (51%) to increase flexibility and mitigate supply chain risks. The research also found 44% have diversified suppliers across multiple geographies.
Moving on from Survival in an Uncertain World
As businesses navigate their recovery from the economic crisis unleashed by COVID-19, the study also revealed executives feel:
- Trade is critical to business recovery: Businesses are counting on the resumption of international trade to help boost their recovery, after U.S. imports and exports both fell last year. They are confident that trade will bounce back to or even exceed pre-pandemic levels within one to two years.
- Bullish on foreign investment: Businesses are also optimistic about their outlook for foreign investment to grow sales, operations, or their supply network. Over eight in 10 (83%) said they are planning to increase their investment in foreign countries this year. The top region being targeted for foreign investment is North America, a sign that decision makers like free trade. The ratification of the new, modernized trade agreement between the U.S., Canada and Mexico last year brought a measure of economic certainty to the region, stability that was needed to spur investment in new suppliers, new factories, or new customers.
- The longing to reconnect, face-to-face: A surprising 44% of respondents believe that their organization is planning to increase international business travel to beyond pre pandemic levels in 2021. This is a positive indicator for the struggling travel industry, particularly considering that a further 41% of respondents’ organizations plan to at least return to pre pandemic levels of travel during the course of this year.
- The desire to foster closer alliances: U.S. corporations are ready to recommit with its allies, especially on global issues such as climate change. Respondents see the importance of trying to reverse, or at least slow, changes in the climate, and these efforts would certainly be aided by the U.S. rejoining The Paris Agreement, something that 96% of respondents believe it is important that they do.
Indeed, the spirit of international cooperation has been strong in the response to the pandemic. Businesses, government agencies and nongovernmental organizations have been working across borders to solve problems at scale, such as developing a vaccine for COVID-19. “The survey findings clearly show the commitment that U.S. business leaders, for their part, have toward engaging with the global marketplace and also toward U.S. leadership on major issues such as climate change.” said Parra.