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Tuesday morning, the Institute of Export & International Trade (IoE&IT) and Ernst & Young (EY) released their report, “TradeTech: A pathway for businesses to seize trade opportunities”.
Marco Forgione, director general of The IOE&IT told TFG, “This report is an essential step to demystify what tradetech can do for businesses and how it can address the growing complexities of moving goods and services across borders. These technologies are not a distant dream but are already in existence and available for SMEs in international trade to implement and start using today.
That said, there are a few remaining actions for the government to take before traders can unlock the full potential of these technologies. The report has a section dedicated to these barriers and outlines how businesses can advocate for the necessary government reform. These efficiency gains of implementing tradetech will benefit everyone, but especially SMEs who are the most resourced constrained participants of international trade.”
Sally Jones, EY partner told TFG, “There are huge benefits to be had from digitalising trade. But it’s so hard for businesses to navigate because of the rapidly evolving technology and fragmented rules. Devoting some time to embed digital trade into a business’s wider digital strategy will pay dividends.”
Current tradetech landscape
The IoE&IT and EY report reviews current tradetech use cases and aims to provide businesses and policymakers with a roadmap for potential next steps. A 2021 EY report shows that in the face of an ever-changing global market, 48% of businesses do not feel equipped to handle new digital regulations.
Small and medium-sized enterprises (SMEs) are particularly vulnerable to tech-related hurdles. But as more companies adopt new technologies and governments continue to provide support and pass guiding legislation, tradetech integration will become more standard.
Current tradetech use cases include:
- Increasing the speed and efficiency of trade finance by removing paper documentation and connecting firms with non-traditional lenders.
- Tracking products and shipments during transit, increasing supply chain visibility and reducing the chances of fraud.
- Digital platforms provide traders with a platform to submit customs paperwork, enhancing the efficiency and speed of customs clearance.
- Reducing the costs related to building an e-commerce platform.
Benefits of tradetech adoption
The IoE&IT and EY report shows that adopting tradetech will benefit all parties involved in trade, ranging from suppliers to buyers to commercial customers.
Though companies and governments have been slow to take steps towards digitisation, the benefits are clear. Companies would see a reduction in costs, and an increase in speed and resilience.
The use of distributed ledger technology (DLT) will help mitigate documentation errors and increase compliance throughout the supply chain, increasing risk management capability.
6 steps to prepare your business for trade digitisation
Digitisation will bring many benefits to the trade industry, but it is essential to prepare appropriately for this transition. Many companies have started the process, but the industry needs further guidance. IoE&IT and EY laid out six steps to help prepare companies for this transition.
- Monitor the digital landscape
- Identify and integrate tradetech into company strategies
- Consider the future when redesigning company policies
- Invest and building capacity for future growth
- Collaborate with partners throughout the supply chain
- Engage local and national governments
The tradetech landscape is changing rapidly, and cross-industry collaboration is vital the successful implementation. The IoE&IT and EY report aims to simplify the current landscape and for SMEs and corporates, eventually leading to widespread adoption of the available technology.
As the UK prepares to pass the Electronic Trade Documents Bill (ETDB), Forgione said, “The Electronic Trade Documents Bill is a vital development for the improvement of the efficiency and sustainability of international trade. The bill would place electronic trading documents on the same legal footing as paper documents and enable businesses to move from paper-based to digital-based transactions.
This will have a considerably positive impact on costs, duration and environmental impact of customs and border processes. In a side-by-side test conducted by eTEU, e-bills of lading were seven times cheaper and arrived six times faster than their paper-based equivalent. This Bill is an essential part of revolutionising international trade and would certainly accelerate the adoption of tradetech.”
Tradetech will become ever more prevalent in the UK with the coming 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.
Sally Jones said, “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.”