With the world as it is today, the rules dictating what can be traded with particular countries, are becoming increasingly convoluted and difficult to follow.
Up until recently nothing could be sent to Cuba from the US and almost anything could be bought from Russia.
Now it is fine to trade with Cuba and due to sanctions, Russia is increasingly isolated.
Trying to keep on top of all of these restrictions and changes in permissions, as well as working through the basics of keeping a supply chain running smoothly can be a headache. It often seems like the ground is shifting under your feet.
So what do companies need to look out for?
Sanctions are the most important aspect to look at in terms of what you are trading with a certain country.
This is because not only could this nullify any deals, but could actually see somebody being fined or even jailed, simply from not checking an address properly.
Political sanctions can have a major impact on companies around the world. In the case of Russia, this would have significantly dented several company’s bottom lines as it has been a big importer during the past decade.
Sometimes political upheaval can cause changes in trade overnight, meaning that companies need to always be wary of what they are sending and where.
Especially in more turbulent areas, the changes can be swift and sending the wrong items can result in extreme reactions. This could be from opposing governments, others within the country or even your own sovereign governments.
It may not even be a coup that causes this kind of problem, simply having a rebellion in a certain area may constitute a change of what should be sent through a particular area.
Two current examples are Iraq and the Ukraine, where swift changes in the stability of these regions has meant that transporting goods or offering services to these regions could have dire consequences.
Corruption And Risk
We have looked at how companies are looking to avoid certain punishments from breaking sanctions, but we have not looked at an everyday risk that also has severe consequences.
It is important to know the rules of the countries that you are trading with, because slight deviances from the rules can put shipments at risk of impoundment or even seizure. This can lose companies millions and also flag them as potential targets for future corrupt behaviour.
It can also put them in the position where they are forced to bribe local officials to release goods, which is not only a cost financially, but is also illegal, so may lead to criminal prosecution.
Corruption may not even be direct, but if shipments are impounded and left without sufficient security can easily be stolen.
There are several important aspects to consider when trading across international borders and these are just the tip of iceberg.
Working to minimize the potential losses from these situations needs to be a priority for companies today. In many cases failure may cost more than just money.