Dumping is a latent risk that must be constantly monitored by the appropriate agencies in international trade and logistics, in order to preserve the good health of the sector and avoid large losses of economic resources and, more importantly, maintain high satisfaction and general welfare of users who depend on these companies to make their shipments without problems.
These types of negative practices cause mostly irreversible damage to logistics companies, causing the elimination of jobs on a large scale and increasing the levels of hopelessness and economic precariousness in the regions where they operate.
As expected, these much-criticized practices are currently penalized by the General Agreement on Tariffs and Trade when carrying out any type of logistics agreement at the international level, in order to prevent governments from creating mechanisms that facilitate unfair competition of products exported from there.
What is dumping and what advantages and disadvantages does it offer?
Dumping is, in simple terms, one of the worst unfair practices that any government or logistics company can apply to achieve leadership quickly and with as little effort as possible. This practice consists of reducing the sale price of a certain product to minimum levels, and even well below its cost of production, with the aim of commercially eliminating the rest of the competitors in the logistics sector.
This type of practice only represents advantages only for the beneficiary company, the end users who will receive these products and for the governments that make it possible, since they will be responsible for subsidizing the company for the millionaire losses it has when selling its products at prices totally below their original cost, thus providing a difficult strategy to combat for the rest of logistics companies in the sector that follow the rules of the game properly.
Among the disadvantages of a practice such as dumping, perhaps the ones with the greatest negative impact are precisely the subsidies that in some cases governments grant to companies, which may not be effective or sustainable enough over time, especially when we talk about months or years carrying them out.
International regulations on the subject
Although dumping may be a practice considered harmful in most cases, the World Trade Organization does not have a decisive position on whether it is unfair or not. According to the international regulations of this regulatory body, dumping as such is legal as long as it is conclusively demonstrated that the companies that carry it out do not affect the competitiveness or good commercial health of other competitors.
However, a number of countries have implemented measures to prevent these practices through different types of quotas and tariffs. In that same order, cargo insurance is ideal to protect your operations against dumping and ensure its smooth operation. For more information about our cargo insurance, do not hesitate to contact us to learn more about how we can ensure your brand and prestige in front of your customers.