Over the past 18 months, global supply chains have faced unprecedented challenges, with disruptions having a profound impact on logistic providers and businesses alike.
At a special webinar earlier this month, OFX, a leading foreign exchange and global payments provider, teamed with WiseTech Global, a leader in logistics software solutions, to discuss those challenges and identify opportunities going forward.
Selena Verth, CFO, OFX warned that exporters can expect more volatility in these difficult times.
“There is more complexity moving goods around the world from a logistics perspective and that’s getting more expensive, so margins are critical,” Verth warned.
“With volatility, you need to make sure that you don’t run the risk of ordering inventory and by the time it arrives, it could cost you a lot more. You don’t want to run that risk because it’s not healthy for your margins.”
To protect business margins, exporters need to be strategic about hedging that risk, Verth said.
“You want to protect that margin that you’ve created and one of the ways to do that is to hedge your FX risk so that it doesn’t become a problem later on.”
“If you look back to pre-COVID and pre-pandemic, we had some of our lowest FX volatility in a long time, so rates really weren’t moving. The Aussie dollar kept to a really slight range. Then when the pandemic hit, we saw some of the biggest volatility we’ve ever seen.”
How data-led insights can help globally minded businesses
Data could hold the key to future, says Verth.
“It is becoming more and more important. It’s giving great signals as to what could be changing in the world, what do you need to look out for, what are some of the trends that are out there.
“You have to automate processes to allow you to grow at scale, reduce error, reduce risk, have better controls and also free up time to look at the data.”
Connecting FX data with logistics data could help customers to better manage their businesses.
“We’re only at the very beginning of that, but data will play an even more important role in the future in helping our customers manage their business with what we can see in the data sets.”
Freight forwarding will remain an issue in 2022
Andrew Cartledge, CFO, WiseTech Global says freight forwarding will remain a key challenge for many businesses.
In the past year, businesses have experienced huge increases in volume as a result of the goods-led part of the COVID-19 pandemic recovery.
This has reduced capacity to ship those goods predominantly through air freight, increasing the demand on sea freight.
At the same time, the pandemic has opened new opportunities for businesses trading globally.
“Our customers have been really challenged through this period to find capacity both through ocean and air freight,” says Cartledge.
“This has added a degree of complexity into the industry. “So, we’re going to have to find creative ways to help manage some of the supply chain bottlenecks we have as we move through different phases of recovery.”
How technology can support the future of the global logistics industry
Supply chains are an important part of the economy in various countries, he says.
“Countries and governments will increase the level of scrutiny and compliance around global logistics and customers will demand new products in terms of how to ship products to consumers.”
The key to future, says Cartledge, is to provide technology solutions to address all of the current concerns and developments in the industry.
Earlier this year, OFX and WiseTech Global launched a new Integrated Global Payments system within the CargoWise platform, to streamline global payments.
Integrated Global Payments is now available to customers across 33 countries.
Through this solution, customers can take advantage of OFX’s competitive FX rates across more than 50 currencies.