Digitalization and paperless trade boost efficiency and cut costs in cross-border trade and stand to transform the global movement of goods, a new report (pdf) by DP World says. Single Window (SW) initiatives — mediated via the World Trade Organisation’s (WTO) Trade Facilitation Agreement (TFA) — have also demonstrated substantial benefits in terms of boosting trade and cutting delays and costs, the report also said.

Despite having the potential for large gains, less than half of the world’s governments have implemented paperless cross border trade, the report notes. Only 47% of the world’s governments have put paperless trade into effect, choosing instead to rely on paper-based methods that are “inefficient and error-prone,” and limiting efforts to promote digital transfers and achieve legal recognition for digital trade data and documents that are transferred cross border.

Big savings on time and money: Countries that have revamped and digitized their customs procedures to align with the Revised Kyoto Convention have seen a 64% fall in import and export times and costs. Fully integrating cross-border paperless trade is forecasted to boost global exchanges by as much as USD 1 tn per year and reduce global trade costs by 14%.

What does digitization look like? To digitize custom procedures, software is used to collect, organize and manage customs data, documents, and duties, Danish shipping giant Maersk reports. Governments are encouraged to launch SWs, which represent unified portals that connect customs agencies, service providers, and traders, enabling data exchange, clearance, and payments via a single platform.

SWs boost bilateral trade between countries by 37% by streamlining transactions, curbing costs and delays, and boosting transparency, the report said citing a 2020 study. However, the report also highlights the importance of “interoperability within and between SWs,” which can be achieved via globalized standards and technology-neutral laws. Ethiopia saw clear gains from adopting a TFA-aligned SW framework with assistance from the WTO, seeing costs halved and clearance times falling from 44 days to 13 days, and boosting the country’s trade competitiveness through early adoption, the report said. Digital trade and SW initiatives in North Macedonia also saw the country realize gains in competitiveness, the report also said.

SWs are gaining traction in the region: Yemen launched a maritime SWservice at Hodeidah Port to streamline and simplify information exchange in January. Omani logistics player Asyad inked a concession last year with Oman’s Public Authority for Special Economic Zones and Freezones to develop a SW for licensing, permits, and approvals. Dubai Maritime Authority issued a directive last May requiring all service providers to declare container charges through a secure trade SW portal in a bid to boost transparency. Abu Dhabi-based AD Ports, kicked off a SW to digitally facilitate Abu Dhabi trade in 2022.

The UAE is positioning itself as a leader in the region’s trade digitization push: The UAE inked an agreement with the World Economic Forum to launch the initial three-year phase of a Global TradeTech Sandbox in late January to drive innovation in the trade technology space. The sandbox looks to drive innovation by implementing versatile regulations and establishing best practices while streamlining collaboration between exporters, logistics companies, ports, regulators, and customs officials to enable smoother trade. Apart from the regulatory sandbox, the Trade Tech initiative will also deliver annual research reports, and implement an incubator for tradetech startups.

Tags: