The Institute for Export & International Trade (IOE&IT) and EY today (21 March) launched a new report on trade technology (TradeTech), exploring the potential benefits for all businesses of greater digitalisation of trade.
TradeTech: A pathway for businesses to seize trade opportunities explores how technology could be a fundamental part of ensuring international trade moves away from its existing dependence on paper-based forms, thus allowing businesses to digitalise trade operations.
The benefits of greater use of TradeTech for businesses include increased efficiency, more accurate processes, reduced operating and trading costs, supply chain transparency and improved resilience, as well as inclusive and sustainable trade outcomes.
Speaking at the launch event, Marco Forgione, director general of IOE&IT said:
“This report is about evangelising this technology. While for micro small and medium-sized enterprises (MSMEs) adopting this technology may seem like a big hurdle, the benefits you drive into your business are immense.
“The improvement TradeTech offers for not just better profitability, but also resilience, is almost immeasurable. But it also brings greater visibility to manage business processes and activities. The knock-on benefits of taking a digital approach to how you manage your international trade activity are cumulative across the whole business.
Forgione added it was important that, wherever possible, systems and technologies were designed to facilitate interoperability – with shared data and systems operating across different countries, markets and systems.
“We want to avoid having one digital island in the UK and different ones in each other country.”
Advantages and disadvantages
Sally Jones, partner at EY, added that TradeTech has up to now suffered somewhat from what might be called first-mover disadvantage and second mover advantage.
This report therefore represents a potential moment around which to rally policymakers and businesses.
“The question is how do we bring a coalition of the willing from business together so that the benefits accrue without undue costs?
"We want this report to be the first step towards creating the education and an environment, not from a conceptual level, but from a deeply practical, operational level of what businesses need to be doing.”
The report sets out an analytical model that breaks down opportunities into business use-cases (such as trade finance, customs, and so on) and the underpinning technologies (digitalisation of documents, AI, Internet of Things) in order to define the different benefits which can be derived from TradeTech.
Practical steps
In the report, IOE&IT and EY explore practical steps and the potential benefits TradeTech can add to businesses, helping them to grow their international trade footprints, increase traceability of products and make supply chains more transparent and resilient. These are outlined in more detail below.
The digitalisation of trade processes has been slow, owing to a combination of factors including regulatory barriers, with many international trade processes still requiring paper-based forms and lack of interoperability between systems.
This new report is aimed at providing not just businesses, but policymakers with the necessary background to understand the benefits of adopting TradeTech solutions and how it relates to their international trade journey.
For Forgione, the process of digitalising trade is long overdue,
“We need to help educate businesses to build capacity and implement the systems they need to take full advantage of the technology being developed. It is also integral that governments and policymakers fully understand not just the economic benefits that TradeTech can deliver, but, how these processes can reduce barriers to doing business and make international trade more inclusive and widespread.”
TradeTech will become ever more prevalent in the UK with planned announcement from the government on the Target Operating Model (TOM), which will be launched in 2023, redesigning the country’s border operations from top to bottom as part of the wider Border 2025 strategy.
Jones added:
“Businesses in the UK have a unique opportunity to become global leaders in adopting TradeTech solutions as part of their operations. The UK’s rich tech ecosystem, combined with an enabling regulatory environment, leads the world in trialling these new technologies.”
The report has six key bits of advice for businesses to consider:
1. Monitor the ever-evolving landscape
The development of TradeTech is advancing rapidly. To remain abreast of the latest opportunities arising, businesses should adopt a mindset that faces the challenges head-on, continuously seeking to monitor technological innovation, new laws and regulation, as well as the most recent industry trends.
2. Integrate TradeTech into digital technology strategy
As countries develop their national digital strategies, companies should also identify opportunities and develop a forward-looking, long-term strategy – including board-level priorities – on how digital technology can be integrated into business operations.
This should be done by identifying where there is capacity for expansion and automation, as well as what types of technologies could be introduced.
3. Future-proof new system and processes
When designing current systems, companies should consider how digital processes and TradeTech can be integrated (when ready) to minimise re-design or replacement in the medium term. Not only is this a cost-saving measure, but it also reduces complexity from switching further down the line.
This also includes having policies in place that are important for safe, reliable TradeTech functions - for example, having privacy and data retention policies, including considerations of overseas territories’ requirements.
4. Invest and build capacity
Future-proofing processes also includes investing and building capacity both in infrastructure and staffing. By identifying and prioritising areas where digitalisation can occur, purchasing appropriate technologies (at the right time) will create the supporting infrastructure needed.
Similarly, TradeTech enhances and supplements international trade jobs. While eliminating the need for a range of professions, workforce size will not necessarily shrink. Rather it will result in a restructure and upskilling of the workforce to more high-skilled, strategic work delivering more valuable contributions. Businesses should assess their skills gaps early and identify learning and development opportunities, enabling them to maximise the opportunities of trade digitalisation.
5. Engage with upstream and downstream partners
Full participation of the supply chain is needed for the benefits of TradeTech to reach maximum potential. This means that businesses and participants in other parts of the supply chain need to consider opportunities for TradeTech in their own operations and identify synergies and linkages to their business.
This could include proactive engagement with partners or joining trade bodies and groups of companies with aligned interests to exchange information.
6. Engage with government
The private sector is a leader in integrating TradeTech into its business operations, but success depends on all trade players’ participation, which is currently hindered by high costs and national and international policy environments.
TradeTech also delivers benefits to the broader national economy and many government regulatory agencies are users of TradeTech. Accordingly, bringing government alongside business is crucial.
