Technological improvements have the potential to increase efficiency and open up new markets. Technologies such as artificial intelligence (AI) and blockchain will impact the future of trade as these advancements can vastly improve the aggregate supply for many industries, promoting lower prices and higher output. Because of this, BCG’s Henderson Institute estimates that in total ‘digitally enabled’ trade is worth between US$800 billion and US$1.5 trillion.
However, technology also poses a threat to trade as some technologies may disrupt current patterns of production and trade – shortening supply chains and creating greater autonomy between individual countries. The net effect of technology could reduce the value of trade down to only US$400 billion.
This threat can be minimised, however, by the implementation of domestic policies by government officials to draw away from the threat and instead take advantage of technology.
The role of policymakers to minimise the threat technology brings will be integral towards the future. With a non-standardized and continuously tightening policies regarding technological trade (specifically in cross-border data transfer), comes a future of fragmented economies that may close off the trade of services between countries.
Artificial intelligence will lead the way in cutting costs and increasing efficiency. With the implementation of autonomous vehicles, robotics, IoT sensors within different steps of the process along the logistic chain from shipper to recipient, expect a significant increase in efficiency as AI is being implemented gradually.
Some examples of trade-specific implementation within the logistic chain include autonomous ships, land vehicles, drone delivery, logistic management, ports, and warehouses.
The ‘unmanning’ of cargo ships could see a 6% reduction in fuel consumption alone, as well as a 5% reduction in construction costs.
Autonomy has the potential to reduce costs by 45%.
The operation costs of autonomous drones delivering parcels are 70% lower than van delivery.
As automation progresses, logistics costs may fall by up to 40%.
Platforms to predict ship arrival at port can reduce waiting times by up to 20%.
By 2023, up to 65% of warehousing will be automated paired with data analytics that could increase capacity by 20%.
From 2019 to 2020, the global retail market grew by 4.5%, whilst the e-commerce market grew by 18%. E-commerce is a game-changer for the retail industry and also stimulates trade between countries as it promotes convenience and availability. Our report also found the shift of e-commerce from the West and the East.
There is a potential for blockchain to be utilised within the trade industry that could not only drop costs but could open up the market to more players worldwide. With the use of IoT sensors and blockchain technology, documents that are crucial in trade would be vastly simplified and discounted with the use of smart billing.
Smart billing utilising blockchain is capable of replicating the bill of lading which is typically expensive and troublesome. The first use of the smart bill system only costs USD $15, a reduction of 90% on the average total cost of issuing and handling this process. This opens up the possibility of cost reductions and allows smaller businesses and exporters to compete.