Five developments were changing how goods, documents and payments move across borders when this article was first published in 2023: blockchain records, artificial intelligence, the Internet of Things (IoT), cross-border e-commerce platforms, and the push for greener supply chains. Each one changes a different part of a trade transaction, from tracking a container to settling the payment.
Below is what each one does in a trade transaction and where it helps.
Blockchain in supply chain management
A blockchain is a shared, decentralised ledger. Once a transaction is recorded, it cannot be changed without the change being visible to every party, which is why it has been proposed for supply chain records. In a 2016 McKinsey interview, Don Tapscott described how blockchains could change the way such records are kept.
Applied to trade, a blockchain can hold a tamper-proof record of each transaction from the origin of the goods to the final buyer. Companies can follow items in real time, and the record can help prove that a product is genuine, which helps brands fight counterfeits.
Blockchain can also cut paperwork. Shared digital records reduce delays and copying errors in trade documents, and smart contracts (code that executes payment automatically when agreed conditions are met) can settle payments with fewer intermediaries and lower transaction costs.
Artificial intelligence for analytics and automation
AI lets companies analyse far more trade data than a person could read. Algorithms can find patterns, trends and anomalies in shipment and trade statistics, which helps businesses plan supply chains and spot new markets.
AI is also used to automate routine work in trade: preparing documents, customs clearance and compliance checks. Robotic process automation (RPA) handles rule-based, repetitive tasks; combined with AI, it can take on tasks that need some judgement, such as reading unstructured documents. The result can be lower costs and faster clearance.
Tariff classification is one of the customs tasks where AI tools now suggest codes. Whether those suggestions can be relied on, and why classification is hard to automate, is discussed in Can AI do HTS classification? and in the difficulties of building AI-based HS classification tools. For a broader look at AI across trade operations, see the role of AI in international trade.
Internet of Things for visibility and tracking
The Internet of Things is a network of devices that exchange data without a person in the loop. In trade, the useful devices are sensors and RFID tags attached to goods, containers and vehicles, which report their location and condition in real time.
That visibility helps companies plan their supply chains, manage inventory and reduce losses from theft, damage or spoilage. It also means a seller can tell a customer exactly where a shipment is.
E-commerce platforms and cross-border trade
Online marketplaces let a company sell to customers in other countries without opening an office there. Many platforms offer local payment options, several languages and shipping services, which makes a first export sale easier to manage.
Platforms also use machine learning to personalise what each shopper sees, to set prices and to recommend related products. Some use augmented and virtual reality so that customers can try on a product virtually or see how it would look in their home before buying from abroad.
Delivery has improved as well, with same-day or next-day options in some markets and international shipping arrangements between platforms and carriers. Small parcels sold online still have to clear customs, and each needs a correct tariff code; the problems this creates are covered in HSN classification challenges in the e-commerce sector.
Sustainability and greener supply chains
Businesses and consumers are paying more attention to the environmental cost of trade, and supply chains are changing in response. Companies are cutting waste and carbon emissions by using renewable energy, planning more efficient transport routes, using less packaging and applying circular economy principles such as reuse and recycling.
Biodegradable and compostable packaging is one visible result. Another is the growth of certifications such as Fair Trade and Organic, which tell buyers that goods were produced to stated ethical or environmental standards. For exporters, a recognised certification can set a product apart in markets where buyers ask for it.