Companies involved with global and transnational trade need management processes to navigate compliancy, regulations, and other trade issues specific to the countries they are trading with. This is a daunting task, not only because of the copious amounts of information and regulation but also because trading companies are held accountable for non-compliance. Typically supply chain management solutions (SCM) and enterprise resource planning solutions (ERP) lack strong international logistics and global trade management (GTM) capabilities. In light of this over sight, the merger between JPMorgan Chase Bank, N.A. (NYSE: JPM), a leading global financial services firm and Vastera (NASDAQ: VAST), a public global trade solutions provider, is looked upon with great interest. Supplementing JPMorgan Chase's financial services with Vastera's global trade management software will likely make JPMorgan Chase the first financial institution to offer a complete set of integrated cash, trade, and logistics solutions across the physical and financial supply chain.
Part two in the Merging Global Trade Management with Global Finance series.
Vastera provides global trade services that manage the flow of information throughout the global trade community to improve visibility of international product movement and more quickly move goods from country-to-country. To help companies fulfill global demand, forwarders, carriers, and brokers have joined financial institutions and customs agencies to form the global trade community. Improving near real-time collaboration between the members of the community has also become essential to maintaining control over the movement of goods.
Vastera's initial services began with application software designed to address logistics and country-specific regulations including taxation, duty, and licensing, etc. After acquiring Ford Motor Company's global custom import operations, it broadened its services to include trade management business process outsourcing (BPO) services. These trade services became the backbone of its Managed Services Provider (MSP) offering.
Managed Services Expanded
Managed Services is now Vastera's principal line of business. While the vendor has numerous Managed Services customers, its two largest customers, supplied 69 percent of Managed Services revenues in 2003. Specifically, its Managed Service agreement with Ford included the administration, automation, and management of Ford's global trade import operations in the US, which will be in effect until August 2005. This relationship has expanded to include the administration and management Ford's global trade import operations in Mexico, Canada, the UK, Spain, Belgium, and Germany. These agreements provide Vastera with a guaranteed, predictable, and recurring revenue stream worth about $25 million (USD) in annual revenues from the agreements with Ford US, Ford Mexico, Ford Canada, and Ford Europe in 2004.
In addition to the lucrative Ford agreement, in August 2001, Vastera entered into a five-year Managed Services agreement with Lucent Technologies to manage global trade operations in the US. This relationship also grew to encompass responsibility for administering and managing Lucent's global trade operations in other countries in North America, Europe, and in Brazil. From August 2001 through August 2004, the vendor generated approximately $25 million (USD) in aggregate revenues from this agreement. Then in June 2003, Vastera acquired GE's internal US customs import operations, and also entered into a Managed Services agreement which calls for the management of the US customs import operations for five of GE's divisions for a minimum term of three years.
As part of its strategy to expand its global presence and competitive position, Vastera acquired other entities providing GTM solutions in Mexico, Canada, and Brazil in the first quarter of 2002. Of these is Speedchain, a development stage supply chain event management (SCEM) and global e-logistics provider, which has failed to produce revenue since 1999. Nonetheless it was acquired by Vastera in March 2001 for approximately $18.8 million (USD).
As a result, Vastera now has three principal solution offerings for GTM, which are TradeSphere Solutions (a software offering); Trade Management Consulting (a business process consulting offering); and its Managed Services (a BPO offering) program. Clients may select elements of each of these product and service offerings to address their specific needs and opportunities, and this flexibility provides individually tailored solutions to automate and increase the efficiency of the global trade processes.
Vastera Global Trade Content
Vastera's solution offerings are based on a collection of proprietary processes, data, rules, and regulations. Called Vastera Global Trade Content, it is at the core of all other solutions. It is a rules-based application that provides comprehensive management of trade regulations and programs. This extensive base of electronic content serves as the repository for Vastera's entire suite of GTM solutions.
Global trade expertise and specialization is needed to required to acquire, interpret and update country-specific trade regulations, thus the vendor employs a full-time content team dedicated exclusively to tracking and managing trade regulations, trade content, and preferential programs. These experts include a former government compliance official, international trade lawyers, licensed customs brokers, and in-country data experts. Impressively, Georgetown University Law Center's Larry Christensen, a former senior official at the US government's Bureau of Export Administration, acts as Vastera's vice president for international trade content (where he manages the collection, interpretation and dissemination of critical trade rules and regulations to clients). George Weise, Vastera's vice president VP of global trade compliance, is a former commissioner of the US Customs Service.
Vastera offers various levels of content to its clients, from comprehensive content automation to document automation. To keep current with the latest country-specific trade regulations, the vendor updates solutions on a regular basis. Consequently, updates and postings are made electronically through TradePrism.com, its global trade exchange, and Vastera.Net, its private client exchange. Information provided in the Global Trade Content includes trade data, government denied party lists, regulation updates and notices, trade committee meeting information, requests for public comment on regulatory issues, and final rulings on proposed regulation.
TradeSphere
TradeSphere is Vastera's set of software applications that streamlines and automates the information exchanges associated with the cross-border movement of goods. Its components facilitate specific global trade functions, strategically manage the information required to trade globally, and enhance the efficient exchange of information and goods among extended members of a client's global trade network.
Components of TradeSphere include restricted party screening and boycott/embargo screening, automated shipment documentation, export compliance, import compliance, and customs entry filing. Clients may use the TradeSphere components on a term license, perpetual license, or transaction fee basis.
The vendor has non-exclusive licenses to technology from several companies which is integrated into the TradeSphere product suite, including development tools and facilities from IBM (i.e., WebSphere and MQ Series) and Forte, which was acquired by Sun Microsystems.
In October 2004, Vastera, announced the launch of TradeSphere Exporter 7.5 and TradeSphere Importer 3.3, whereby these newly updated web-based software applications deliver enhanced international shipping and trade compliance functionality, further enabling exporters and importers to reap greater cost and time savings associated with the cross-border movement of goods. Highlights of the latest features available include
* TradeSphere Exporter 7.5 This module delivers enhanced export management and compliance capabilities. Support for AESDirect virtual private network (VPN) service gives exporters a secure and easy-to-implement method of directly filing export declarations, while the new document repository capability provides improved management of electronic images of shipping documents. Finally, Exporter 7.5 features enhanced Canadian export compliance capabilities, and improved processes for export declaration generation and encryption report submission.
* TradeSphere Importer 3.3 This module provides entry management capabilities to an importer before, during, and after the filing process. It also provides accurate information to a company's network of brokers through the consolidated rated invoice functionality. This release also adds significant functionality to manage reconciliation processing with customs. Finally, it provides out-of-the-box integration with TradeSphere Customs Manager US, for complete entry processing control, including Automated Broker Interface (ABI) filing to provide businesses with a strategic advantage in customs processing.
Vastera's Strategy
Vastera's strategy may be unique to the industry. It has leveraged the field expertise within its Trade Consulting and Managed Services Operations teams to continually tailor and improve the functionality. Over the last few years with the growth of its global trade know-how, consulting practice, and managed services division, it has gradually migrated towards services. Lately it acts more like a specialized third-party outsourcing agent than a software vendor. In fact, two-thirds or so of its revenue come from services.
Vastera Trade Management Consulting services leverage extensive global trade expertise and proprietary analytical methodologies. Services range from performing compliance assessments, to designing processes and procedures, to implementing client-specific processes and procedures. Each consulting engagement is based on specifically tailored objectives and deliverables. Vastera Trade Management Consultants provide extensive, hands-on experience gained from careers in a variety of industry sectors with specific areas of expertise including import and export operations and compliance, international transportation, logistics and distribution, trade finance, pricing, international marketing, training, and manufacturing.
Mid-2004, Vastera announced the expansion of its Trade Management Consulting practice to incorporate trade management assessments into its solutions-based sales process. The initial assessment is designed to help clients understand their GTM process and identify opportunities for compliance and efficiency optimization. From the assessment, Vastera and the client will strive to mutually identify if Vastera's technology, managed services, or additional consulting will best solve the client's specific needs.
The vendor believes that using trade expertise in a solution-based approach will further differentiate it and solidify its leadership position in the GTM market. In addition to changing its business development process to leverage Trade Management Consulting, Vastera will also expand the services to include international trade operations, risk and opportunity management, and international trade optimization analysis and assessment to help clients in understand how to optimize their global supply chain.
SOURCE:http://www.technologyevaluation.com/research/articles/navigating-global-trade-waters-17939/
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