We're in the midst of a significant transformation called Industry 4.0, representing the fourth industrial revolution. With the adoption of computers and automation in the third industrial revolution, the fourth revolution will take what began in the third by enhancing it with intelligent systems fueled with data and machine learning.
These transformational technologies are revolutionizing trade by making the process much more structured and systematic. Technological advancements have given immense rise to global trade systems, which isn't something new. It connects the world by bridging the gap of demand and supply and initiates collaboration globally. Over the past few years, technological inventions have laid the foundation for globalization. OCR (Optical Character Recognition) to read container numbers, RFID (Radio Frequency Identification), and QR codes to trace particular shipments. Digitalization of few trade documents has helped enhance the reliability and efficiencies of global trade.
At the same time, transactions that require a large amount of paperwork still depend on traditional banking methods. The global trade system has failed to take full advantage of technological advancements to make trade more systematic, inclusive, and less costly.
The good news is that the future is quite promising as we might be on the brink of whopping changes. Governments, businesses, and employees need to understand the current curve in trends to stay ahead.
What are these advancements? Let's find out.
Below are a few of the technologies that will change global trade in the coming years: -
ARTIFICIAL INTELLIGENCE:
Artificial intelligence is a domain that integrates computer science and robust datasets to facilitate problem-solving. Also, machine learning and deep learning, which are frequently mentioned in conjunction with AI, are sub-fields of AI. These disciplines comprise AI algorithms that create expert systems that make predictions or categorize based on input data. There are several real-world applications of AI systems these days like; automated stock trading, speech recognition, customer service, and many more.
*Source: IBM
Artificial Intelligence, Machine Learning, and Deep Learning can optimize; trade shipping routes, international trade negotiation, truck traffics at ports, translating e-commerce search queries from one language to another, and many other activities.
Apart from optimizing efficiency and customer services, Artificial Intelligence is also used to make global trade reliable and sustainable. For instance, Google launched Global Fishing Watch (in 2016), a real-time tool to combat illegal fishing using ML by providing a worldwide view of trade-related fishing activities based on ship movements and satellite data.
BLOCKCHAIN:
Blockchain is an immutable record of transactions and tracking assets, with distributed ledger technology to speed transactions (a set of rules to store and execute automatically known as a smart contract) in the business network. An asset can be tangible (a land, vehicle, furniture, cash) or intangible (patents, copyrights, IPR).
In the 21st Century, data is of essence to any business. The faster, accurately, and securely it is received, the better it is! Blockchain enables everything; it can track production, orders, payments, and much more. It reduces risks, limits transparency, and cuts down costs at the same time.
What are the few benefits of blockchain?
Security: Record-keeping systems are prone to fraud and cyberattacks. Blockchain offers higher security levels, where no one can delete a transaction, not even the system administrator.
Trust: Confidential blockchain records are shared only with network members especially granted access.
Efficient: Record-keeping often leads to duplication and third-party validation. Blockchain enables accurate and timely data—also, speedy transactions with no third-party verification due to the Smart Contract feature.
These technological advancements can enhance the global trade supply chain tremendously. It is estimated that in the coming years' blockchain would play a key role in trade financing. For example, blockchain is used to simplify obtaining a Letter of Credit (LoC), which is a long and tedious payment mechanism used in trading internationally.
**Source: World Trade Organisation
An Indian private sector bank has redesigned its LoC issuance with the help of Deloitte by developing a blockchain solution that reduced the issuance time from 20-30days to a few hours.
TRADING SERVICES THROUGH DIGITAL PLATFORMS:
Due to pandemic hit since 2019, there has been an increase in online service platforms. Few companies like Upwork, being in the business for decades, allow users to find service providers worldwide for a wide range of services. In contrast, startups like VIPKid (an international learning platform) teach English to Chinese children. MOOC platforms like Udemy, Coursera, TCS iON, HubSpot, and many more are escalating tremendously. Ximpex itself is a service provider platform wherein we help you connect to international traders to expand while earning a tad bit from it.
3D PRINTING:
3D Printing is the process of making three-dimensional solid objects from the digital file, the less labor-intensive method. It produces complex shapes while less wastage of resources as compared to traditional methods of manufacturing.
While 3D printing cannot have every imaginable product currently, the list of what it can make is quite surprising. In the future 3D printing could alter the fundamentals of consumption and rotate the role transportation companies play within.
3D Printing is a hot topic in many industries like electronics, healthcare, aerospace, and many more. It is revolutionizing manufacturing processes undertaking modification by shifting towards additive manufacturing.
Impact of 3D printing on international business: -
Target marketing will not only personalize advertising but also personalize the products advertised. That is a one-of-a-kind product with the ability to customize a product created by 3D printing entirely.
As the 3D printing process is quite flexible, few Global Supply Chain will become obsolete while providing customer convenience. The adoption of 3D printing will alter the global supply chain and put pressure on "last-mile" delivery systems. Amazon, an e-commerce giant, has made great strides in solving last-mile delivery challenges with the help of drone delivery of products for individual 3D printed product deliveries.
Government Regulations: As we know, 3D printing offers consumers freedom over creation and control over the production to producers, but this freedom leads to loss of power by the government over the safety of products and a decline in tax revenue for the government.
This will lead to overall environmental benefits like a drop in the production of unwanted effects, low unsold products causing fewer landfills, less wastage of raw material to create the same product, and many more.
CLOUD COMPUTING:
Cloud computing is on-demand access for computing resources like data storage, networking capabilities, and many more. It lowers IT costs, improves agility, time-to-value (no need to wait for the IT team to respond), and scales easily. Even though security is one of the main concerns, the files stored on cloud servers are encrypted.
Cloud computing is a powerful and cost-effective method that enables businesses to slash operating costs to help companies flourish. The ability to adapt to increasing and evolving customer needs is possible with cloud computing. Small companies like "fulfilmentcrowd" in the e-commerce sector are thriving with the help of cloud computing.
Tough Road Ahead
As the pace of changes accelerates in technology, the impact on international trade has become a crucial topic of political and economic discussion like the lack of governance framework, outdated trade agreements, incompatible licensing and taxation, and many more. Public and private stakeholders should work closely to foster the environment for these new technologies to unleash their positive potential while establishing the framework. Also, regional governing bodies should amalgamate forces to harmonize the regional rules on taxation, data flows, and licensing issues.
The innovation in the tech industry offers a magnificent future for overseas trade with the right governing approaches; these innovations will pave the way for more systematic and inclusive trade growth in the future.