Business boundaries in supply chains

Martijn150x150The European economy is finally growing again, albeit only slightly and still very tentatively. Since consumer spending remains stable, the majority of the economic growth is coming from exports. Hence, export markets are of strategic importance to companies who are seeking growth. Needless to say, the first step is to identify attractive growth markets in which to sell their products, but organising the flow of goods to those countries is also becoming an ever-greater challenge. Supply chain management is critical to the success of export business.

And just when you think you have your export logistics under control, a boycott rears its ugly head – as currently between the European Union and Russia. The EU currently prohibits the export to Russia of certain items used in the production of oil. However, companies are allowed to export those items to Russia if they will be used for other purposes (with a so-called end-user certificate to prove it). Such time-consuming red tape is an unavoidable part of doing business with Russia.

On the flipside of the coin, Russia is boycotting fruit and vegetables from EU countries. Some Dutch tomato growers are working around the sanctions by exporting to Russia via Turkey. They ship their tomatoes in plain boxes to Turkey, where the packages are labelled ‘Made in Turkey’ and then sent on to Russia without a hitch.

Import duties

A boycott is not the only threat – a change to import duties can cause problems too, as Foot Locker Europe discovered last year. In August 2014, the Turkish government suddenly raised import duties on footwear by as much as 50 percent to protect its own shoe industry.

I have personal experience of the Turkish government’s protectionist tendencies. In 2013 I wanted to send copies of this magazine to Istanbul for a congress that we were organising there together with a number of partners. Despite having contracted a leading logistics service provider to ship the consignment, the magazines were held up at Turkish customs, supposedly because the hotel where the congress was being held should have sent a letter to confirm that the magazines would be arriving. I realised then that I would need to print our magazine locally in Turkey in order to ensure distribution there. A supply chain professional does whatever is necessary in order to access and subsequently serve a rapidly growing market effectively.

Martijn Lofvers, Publishing Director & Editor-in-Chief
Supply Chain Movement
martijn.lofvers@supplychainmedia.nl