In some ways, it seems like ages have passed since the beginning of the COVID-19 pandemic. In other ways, it feels like an entire year just vanished into the abyss. Although it’s been over a year since the pandemic turned our world upside down, there is still a lot of uncertainty surrounding the overall impact of COVID-19 on international trade.
For one thing, the majority of economic activity during the pandemic has occurred domestically rather than internationally. Think about it for a second. People are spending most of their capital on healthcare, utilities, and housing, all of which tend to not have an international trade component. What does that mean for international trade?
While some countries are highly vaccinated and recovering economically, others are battling new strains of the virus. So their economies are taking a hit. It’s difficult to navigate the ever-changing winds of the world economy, especially as an importer or exporter.
Is your import-export business still likely to be affected by COVID-19 even in 2021? There are several factors to consider that will help you make the best choices for your business moving forward.
The current state of the world economy
Thankfully, the overall state of the world economy is not nearly as bad as it was in spring 2020 when most countries were enforcing their strictest lockdown policies. In fact, the World Economic Outlook has reported a higher international economic growth projection for 2021 (6.0%) than it had in October 2020 for the same year (5.2%).
That means things are looking good for the future of international trade, right? Well, there is still a lot of uncertainty, which is not conducive to the increased spending that catalyzes economic growth. With the potential for new Covid strains causing panic around the globe, people are hesitant to invest in nonessential products.
It’s important to note that each country is experiencing a different speed of economic recovery. In the US, economic recovery is gaining momentum, and people are motivated to increase their spending due to the rollout of stimulus checks. Other countries that aren’t faring so well in terms of economic recovery include Peru, Spain, and the Philippines.
As you’re deciding how to move forward with your import-export business, consider the current economic situation of each of the countries in your supply chain. If you’re planning on exporting to a country that isn’t experiencing economic growth, you may need to change your strategy to focus on essential items. If you’re thinking about importing to the US, now could be an opportune time to capitalize on the rising economy.
Shipping times and rising costs
While shipping times aren’t as long as they were in the middle of the pandemic (remember how far in advance you had to order holiday gifts?), they’re still much longer than they used to be. Some countries still have limits on the goods they can send and receive internationally. Overall, supply chain delays are becoming the norm.
Sadly, the cost of shipping containers is on the rise as well. Shipping a container costs 80% more than it did in November 2020. Of course, this has significant implications for import-export businesses that bear the brunt of the increased costs and may subsequently need to raise their prices.
In order to succeed in this difficult climate, give yourself leeway when it comes to estimating the arrival time of your goods. Make sure you calculate shipping costs before pricing your products so you can know how much you need to charge.
Which products are the best to import or export in a post-Covid world?
Looking back on 2020, it’s easy to see which stocks you should have invested in. Zoom, Netflix, and Moderna all would have been great choices. But early on in the pandemic, most of us were stockpiling toilet paper instead of considering investments.
Now is another pivotal moment when you have the opportunity to think about which products will be most profitable to import or export in a post-Covid world. If you can get ahead of the game, your business could become very successful.
Essential products always come out on top during a crisis. With an uncertain future still looming, people are continuing to stockpile essential items. Nonessential items, on the other hand, may remain on the back burner in many countries for some time.
If we’ve learned anything from Covid, it’s that e-commerce is the way to go. Brick-and-mortar stores are not making a huge comeback, even after lockdown restrictions are lifted. If you’ve been considering a brick-and-mortar model for your import business, you may want to think about implementing a fully digitalized version instead.
Working remotely doesn’t seem to be going away anytime soon. That means IT products such as computers, tablets, and accessories are in high demand. Cars and gasoline, on the other hand, may see a decline due to this phenomenon.
Which product are you considering? If you have a unique product that suits your target market perfectly, chances are your business will be able to succeed regardless of what the future holds. Spend plenty of time brainstorming before jumping into a new line of products.
Which countries are the best to import or export to in a post-Covid world?
To be honest, it’s difficult to determine which countries you should be importing or exporting to right now. Things are still unpredictable, particularly for countries that are struggling with economic recovery, vaccine rollout, and/or new strains of the virus.
Start by researching the current state of the economy in the country you’re targeting. This will help you ascertain whether customers in that country will be able to afford your products. Don’t forget to take free trade agreements into account as you’re doing a cost-benefit analysis of selling in various new markets.
Of course, the pandemic isn’t the only thing affecting the international trade climate. The US-China trade war is ongoing and continuing to impact importers and exporters around the world. As an importer, you may want to refrain from finding a supplier in China and think about choosing one in Southeast Asia instead.
All in all, COVID-19 is continuing to have an impact on import-export businesses. The best thing you can do is keep an eye on the world economy and the international trade climate to see how you can benefit from whatever shifts may come.
Are you looking for someone to help your business with importing and exporting? At BorderBuddy, we offer great solutions for international businesses of all sizes. Give us a call today.