The dynamic shift in the market has given customers myriad options to choose from national as well as international markets. In order to capitalize the opportunity, many businesses offer their products across international markets, irrespective of their own physical presence in all these countries. This has become possible with cross trade logistics.
What is Cross Trade Logistics?
Cross trade is also referred to as Foreign-to-Foreign trade, Triangular trade, or Third party shipments. It is a phenomenon that involves three parties in three distinct countries. In simple words, it refers to goods being transported from one country to another country but not via the physical location of the business (which is in another country altogether). These goods can be transported through any of the preferred mode – air, ocean or road freight.
For instance, cross trade logistics is useful when you are a wholesaler based in UAE who buys goods from India, but your customer is in Egypt and has ordered for a container of your goods. In this case, you will buy the goods from India and send it directly to Egypt, without receiving them physically in UAE. This type of logistics ensures that the identity of the buyer and supplier are not revealed to each other in this process.
Advantages of Cross Trade Logistics
International trade rules and laws have opened gates for numerous companies to operate outside of their geographical locations. Triangular logistics gives these companies all the logistics benefit they may require to survive and flourish in the international markets. Here are top 3 benefits of using cross trade logistics or Triangular Logistics.
Reduced Logistics Cost – Cross trade means that the cargo or the products can be directly shipped from the supplier’s country to the buyer’s country, irrespective of your geographical location. This means, you will not need to procure goods to your office first and then send it to your buyer’s location, which in turn will reduce all the costs of logistics, customs and taxes in two different countries.
Quicker Shipping Time – Triangular trade logistics can help you choose the best mode of freight and transportation depending on the supplier and buyer’s geographical locations and also skip the hassle of customs and taxes in two different countries. This way, you can benefit from faster transit and delivery times with customs clearance only at the required locations.
Better Competence – Cross trade logistics decentralizes the supply chain, as your goods can be produced at one place and supplied to the other, irrespective of the geographical location of your business. This way you can cater to your buyers anywhere around the world, giving you a competitive edge over other businesses. In fact, you can look for buyers that are closer to your supplier country.
Tips for Cross Trade Logistics
Trade Agreements – Since cross trade logistics occurs between two different countries, other than yours, it is important to do a detailed study of the trade agreement and rules between the supplier and buyer country, so that all he required documents and pre-requisites are taken care of.
Choosing the right Incoterms – We all are aware of the importance of choosing the right Incoterms for the international shipments. Choosing the right incoterms help all the parties understand and agree on their roles in freight forwarding and it also points out the risks and costs of each of the parties, in order to keep disputes at bay.
Appoint an Experienced Freight Forwarder – An experience freight forwarder has a vast network of agents across the globe, a dedicated team, good knowledge of the trade guidelines, Incoterms, Bill of Lading and other required documents required in cross trade. They also assist with insurance, packing, final delivery, clearance and other documentation, making cross trade seamless for you.
ProConnect Integrated Logistics has global handling capability. We have a vast network of agents with an experienced team that can handle all kinds of cross trade logistics for you, from any origin location to any destination. For further information, drop your queries here or know more about our freight forwarding services.