Small and medium-sized enterprises are increasingly focusing on developing their business in international markets. Modern technologies can help them overcome obstacles and compete with large players. These are the conclusions from the latest global “Ship for Success” study, conducted among SME managers by Shipa Freight, part of Agility, a global provider of integrated logistics services.
The SME sector accounts for 95 percent of all companies operating in global markets, generates over 50 percent of global GDP, and employs more than two-thirds of all workers in most countries around the world (according to the World SME Forum). However, smaller enterprises are still underestimated and misunderstood by both governments and big business. They struggle with access to: distribution networks, up-to-date information on changing regulations, business financing, or necessary transport solutions. The “Ship for Success” study showed that 94 percent of SMEs experienced difficulties when organizing international shipments of goods, and 87 percent believe that their national governments should provide them with more support in this area.
SMEs in international trade – barriers and challenges
As the “Ship for Success” study shows, small and medium-sized companies realize that international trade is the best path for their development. Among those that already export their products, as many as 71 percent are more focused on selling them abroad than domestically. Although three-quarters of companies have been exporting or importing goods for more than four years, almost half (47 percent) admitted that they lack knowledge about organizing international transport. For SMEs, international trade involves many challenges. 40 percent of respondents believe that shipping documentation is complicated and difficult to understand, for 42 percent costs are too high or they lack information on the subject, and a significant portion have experienced situations where their goods were detained by customs authorities (39 percent) or lost during transport (27 percent). Companies from emerging markets have greater concerns regarding economic, political, and legal risks than those from developed markets. 67 percent of respondents from emerging markets consider export regulations a major challenge, compared to 44 percent from mature European markets. Right from the start
of operations, 79 percent of companies exporting to Europe encountered serious difficulties. However, all small and medium-sized exporters need more support in understanding complex international regulations and better access to information about regulatory changes to realize their potential. They realize that compliance is important but also difficult, and mistakes are costly. 54 percent of those surveyed believe that the issue of compliance is a major problem, while 46 percent point to difficulties with standards, and 40 percent admit that the cause of problems may be a poor understanding of the requirements for documentation necessary for complex transport processes.
Despite these difficulties, exporters believe their future on the international stage is promising. Of the 400 companies surveyed, 89 percent expect an increase in export revenue over the next three years, although 37 percent admit they are reluctant to take risks. As many as 87 percent of small and medium-sized exporters have a clearly defined strategy for selecting foreign markets where they want to conduct business. Importantly, optimism is particularly visible among SMEs from emerging markets, where almost all (97 percent) predict growth.
New technologies will increase the chances of SMEs
74 percent of respondents believe that the current operating conditions for smaller companies are much easier than before. This is good news, especially since 75 percent of respondents believe that small and medium-sized companies operating in international markets are more resilient and flexible. Despite numerous challenges, the respondents rate their export potential highly. One of the factors strengthening this positive attitude is the rapid development of and access to new technologies. Digital platforms give small and medium-sized entrepreneurs the opportunity to leverage a “virtual scale effect” on one hand, which they would not have a chance to achieve on their own, and on the other, they provide access to global supply chains dominated by large players. SMEs, being more dynamic and agile, are beginning to use these opportunities more boldly. 89 percent of respondents believe that the development of technology is leading to a transformation of the logistics industry, and roughly the same number (86 percent) are of the opinion that technology levels the playing field and enables global operations. 79 percent of the surveyed companies use platforms that offer access to rates and the ability to book transport. These platforms are most popular in China, where 90 percent of small and medium-sized exporters use them frequently or occasionally.
– The conclusions from the “Ship for Success” study can also be applied to Poland. Among our clients are companies from the SME sector that are conquering new foreign markets. We also notice that they are increasingly willing to use technological solutions that facilitate their independent management of transport processes, and importantly, are tailored to their needs. An example of this is the Shipa Freight forwarding platform, which is being used by more and more clients from Poland – summarizes Karolina Gasińska-Byczkowska, Country Manager of Agility Logistics in Poland.
The “Ship for Success” study was conducted among managers from 800 companies – importers and exporters from: the UK, USA, Germany, Italy, India, Indonesia, China, and the United Arab Emirates, representing the following industries: apparel, retail, FMCG, automotive, industrial, and new technologies. The study analyzed various trade models and barriers faced by small and medium-sized enterprises employing between 10 and 250 employees.