Importing and exporting have to be among the most
labor-intensive, paper-heavy activities on Earth. When you add up all
the shipping and payment documents, advance shipment notices, licenses,
certifications, and inspections required by the exporter, the importer,
the freight forwarder, the customs broker, the local and international
carriers, the banks, customs authorities at both origin and
destination, and assorted other government agencies... it's easy to see
why a typical international trade transaction may involve 100 or more
To manage that complexity, more and more
shippers are relying on import/export software. When this software
first came on the scene, vendors focused on automating the repetitive
creation of trade documents. Later, they expanded their products'
capabilities to include tariff classification, landed-cost
calculations, customs regulations, denied-party screening, and order
tracking, to name a few. Today, exporters and importers can purchase
low-cost solutions that handle a single task such as document creation,
or expensive, "soup-to-nuts" global trade management solutions that
control and track trade transactions from purchase order to final
No matter which import/export package a shipper
buys, the attraction is the same: It saves companies thousands of hours
work while dramatically cutting costs. For example, export control laws
require shippers to screen buyers against denied-parties lists. There
are more than 30 of these constantly changing lists, which name
entities with ties to terrorists, criminal groups, and unfriendly
governments. With some exporters having to review tens of thousands of
orders annually, it's difficult to conduct adequate checks. Software
that's updated daily, by contrast, can do the job in a few seconds.
time and cost savings are not the only reason shippers are flocking to
import/export software these days. With security concerns and demands
for supply chain visibility increasing, shippers are looking for more
functionality from their software packages. At the same time, shrinking
budgets mean buyers must spend more cautiously on technology.
Here's an overview of those and other trends that are shaping the import/export software market today.
Security takes center stage:
Since the terrorist attacks of Sept. 11, importers and exporters have
been subject to a growing list of requirements aimed at improving trade
security and preventing terrorism. To meet those demands, they're
increasingly turning to import/export software for help. Many of those
products include modules for checking orders against denied-parties
lists, tracking suppliers' and end users' activities, and checking
compliance with export control regulations. Some shippers are using
import/export software to create electronic advance-shipping notices
required by U.S. Customs and Border Protection (CBP) and to comply with
C-TPAT, the CBP program that requires importers to document how they
and their suppliers ensure an acceptable level of security.
penalties for violating export control laws potentially reaching $30
million dollars, "there are compelling reasons to build compliance
checks into a company's business processes," says Larry Christensen,
vice president, trade content, for Vastera, a provider of trade
management software and services. Software can do that by establishing
protocols for processing export orders and creating transaction
records, he notes.
Christensen also predicts that the
merging of federal agencies into huge organizations like the Department
of Homeland Security will make software an important tool for complying
with security mandates. Import and export administration, trade policy,
and national security are all converging under a single bureaucratic
umbrella—and that means importers and exporters will need to organize
data in similar fashion.
When the economy faltered, shippers cut back on huge, enterprisewide
software buys. Nowadays users are more likely to purchase specific
pieces of a vendor's software lineup, says Rajiv Uppal, president and
CEO of software vendor NextLinx Corp. "Customers today want partial
solutions, not the entire product line," he says. "They are buying one
piece at a time and adding modules."
That was the case for
Elite Group, a Houston-based freight forwarder and customs broker that
bought two modules from NextLinx. Elite uses those modules to help it
conduct denied-party screenings and put together landed-cost
quotations, says John Little, director of compliance and employee
development. The decision to buy just two modules was based on
customers' requests for assistance with those specific activities. The
software steps in when automation can meet customers' requirements
faster and more efficiently than existing capabilities, he explains.
Buyers not only want to pay less for import/export software, but they
also want to spread their payments out. The number of users wanting
solutions delivered over the Internet with monthly subscriptions or
transaction-based fees has noticeably increased. "Most new customers
want a transaction-based model rather than a straight purchase with a
big payment up front," says Beth Peterson, vice president, solutions
marketing, for software vendor Open Harbor.
Integration a priority:
Importing and exporting are intimately connected with internal finance,
making ease of integration with enterprise resource planning (ERP)
systems a top priority for many companies. That was the main reason a
multinational chemical manufacturer recently chose SAP's Global Trade
Services software to manage regulatory compliance, says Misty Rutter,
an international regulatory consultant who is working on the
implementation. The company had already rolled out an SAP
order-processing system worldwide, so the ability to link export
compliance around the world directly to order processing and eliminate
rekeying of data was a big selling point, she says. But there was a
trade off: That particular software provides only the procedural
framework, so the user must build in business rules and regulatory
Access through third parties:
Even the smallest shipper can now gain access to import/export software
through third parties. Software providers working behind the scenes
make it possible for carriers and freight forwarders to attract
customers by offering selected services, such as landed-cost
calculators, product classification, and document preparation, often on
a fee-per-transaction basis. DHL, for example, recently partnered with
Open Harbor, and FedEx Trade Networks is working with NextLinx.
Filling in the gaps:
Domestic information systems don't necessarily work well for
international business. Not only do foreign suppliers have varying
degrees of technological sophistication, but for cultural reasons they
also organize and use information differently. Add to that the common
practice of tacking export/import solutions onto a patchwork of legacy
systems, and shippers end up with information gaps that compromise
That's what happened to The Children's
Place, a clothing retailer that imports about 95 percent of the
merchandise sold in its 650 stores. Rapid growth brought
data-availability problems to light, says Chief Information Officer Ed
DeMartino. He needed a flexible solution that would improve
collaboration and data sharing with foreign suppliers, provide order
visibility from manufacturing through shipping and delivery, and
improve financial processes to speed payments to suppliers.
found the answer in TradeStone, which integrates data into a single,
Internet-resident "window" for viewing orders as they move through the
import pipeline. The quality of the data input by foreign suppliers is
high, he says, because the software was designed with cultural and
linguistic differences in mind. "Training is simple and easy for remote
users...and a lot of those areas are not rich in IT knowledge,"
DeMartino says. The suppliers, moreover, are eager to participate
because TradeStone gives them access to information they didn't have
before. "They all want accessibility to purchase-order information,"
DeMartino notes. "It was long overdue."
One world, one system:
Many shippers are using import/export software to create uniform
information infrastructures worldwide. The Children's Place, for
example, is using TradeStone to standardize the way all of its
suppliers input order information. "We are focused on getting each and
every one of our suppliers to use this," says DeMartino. Likewise,
Rutter's multinational client is using SAP's GTS module to impose
uniform practices on all company subsidiaries. "[The software] gathers
information and feeds it back into the parent company, giving them
visibility into what everyone is doing and how they are doing it," she
The software providers, though, must strike the
right balance between global consistency and local needs, says Uppal.
Working with customs and trade law experts around the world, his and
other software companies are building in adaptations for local
requirements while still maintaining procedural consistency.
Creative applications: Importers and exporters are finding new ways to use software to meet changing business needs. Some of these approaches include:
- Screening software downloads: Export compliance is a challenge for companies that deliver
software over the Internet. "By delivering over the Web they're taking out
logistics and transportation costs, but they don't have the physical
checkpoints [where companies normally review documentation]," says Peterson.
Automation guarantees that online buyers are screened, often in a matter of
seconds, she says.
- Making "what if" comparisons: Elite Group's Little says customers increasingly are asking
for help in researching costs for importing from different countries. By using
software to check duties, taxes, and trade regulations in the potential
countries of origin, trade experts can put together "what if" scenarios that
will help importers make the right decision.
- Using exports to manage imports: Traditionally, a supplier's export activities are managed
separately from the buyer's import activities, even when both are subsidiaries
of the same company. Renault, the French auto manufacturer, is breaking that
mold by using Open Harbor's software to manage both ends of the supply chain
for its new "Logan" economy car. "Renault looks at every export as an import,"
says Peterson. "The export data electronically builds the import
documentation, so it eliminates duplication and reduces the cost per vehicle."
- Tracking after-sale parts and repairs: Even companies that have a handle on regulatory compliance for
imports and exports often fail to apply controls to after-sale repairs and
parts orders, says Peterson. Software can bring after-sales service and repair
organizations, which typically have no regulatory expertise, into the
- Verifying financial data and business processes:
Shippers that are involved in mergers and acquisitions, as well as
those undergoing customs and tax audits, are using import/export
software as an audit tool because it automatically records each step in
every trade transaction. That capability also is helping companies
comply with the Sarbanes-Oxley Act, which requires companies to certify
that their business processes and financial statements meet specified
standards. "If there is sufficient reliance on export revenues that it
would materially affect the company's financial performance if
something went wrong—for example, if you received a denial order
forbidding you from exporting because of a violation—then your export
control procedures would have to be certified," Christensen says.