The efforts to expedite trade supply chains and the financial transactions involved in trade processes have become central in today's business activities. With the arrival of the Covid-19 pandemic, these efforts have substantially increased, since new and more innovative business models are being adopted in parallel with the rapid evolution of information and communication technologies (ICT).
The opportunities and benefits from digitalization in trade relations are vast and address the recent challenges that the sector faces in a world of interconnectivity, digital transformation and speed, where businesses seek to stay competitive, reach a global range of customers, lower trading costs and potentialize the supply-demand relationship. Hand in hand with this transition, the development of new technologies has opened the doors to novel combinations of goods and services and their delivery forms, which in other words means that, for example, an object can cross a border as a service but becomes a good when it is consumed, as it happens with 3D printing service. Additionally, since the global marketplace is becoming more accessible through Internet, small and medium sized enterprises (SMEs) and start-ups are having the opportunity to enter new markets around the globe and flourish, by means of innovative digital tools that allows them to overcome geographical barriers; use alternative financing mechanisms, such as crowdfunding; access cloud-based services that avoid investment in tangible assets; and optimize B2C (Business to Consumer) dynamics.
Considering the above, we will analyze below some of the advantages that digital immersion offers to international trade. It is first necessary to understand the meaning of digital immersion in the area of foreign trade. It refers to the digitally enabled commercial transactions of goods and services that can be either physically or digitally supplied and that concern consumers, enterprises and institutions1. Now, trade digitalization is characterized by the movement of data, both as a means of production and as a tradable asset itself. It also means an increase in the scale, scope and speed of trade and the opportunity for businesses to offer new goods and services to a larger spectrum of clients, throughout the use of digital tools such as online platforms, cloud data-storage and electronic payments. It implies, as well, the downsizing of the distance between buyer and seller.
Having this in mind, one advantage of the digital immersion in international trade is that it enables more mechanisms for businesses and people to invest in intangible assets, including research and development (R&D), intellectual property (IP) and branding. This is means that with the available digital technologies, the opportunities for investment and trading have expanded, given that the market is overcoming some of its barriers, such as physical limitations for transactions. On the other hand, intangible assets are increasingly and rapidly growing in the market, as well as their value, therefore the development and use of mechanisms that facilitate their acquisition and trading represent a competitive advantage for businesses.
A second advantage refers to the fact that the digital transformation improves costs and renders more effective local logistics in the shipping industry. Automation and blockchain technologies have acquired a central role in the modernization of ports, airports and transport performance. Today, data is considered one of the main resources of ports, this because the national registry and customary processes concern the dense movement and storage of data. Thus, digitalization brings key benefits to the sector, including automation, time efficiency, information security and electronic signature, therefore facilitating trade activities and reducing times and costs.
A third advantage is the digitalization of processes regarding document operations in trading. From digitalized presentation of documents, such as letters of credit, to the digitalization of document processing, the digital immersion offers an opportunity for businesses and institutions to expedite the sales and dispatch of goods, throughout the use of advanced technologies such as optical character recognition (OCR) and artificial intelligence (AI) content in the examination of paper documents presented in the use of credit letters and other credit documents. In addition to the previous, the immersion in digital technology offers greater security and interoperability between companies, governments and customs agencies around the world, making it available for businesses to exchange data in real time and electronically, thus facilitating and deepening commercial transactions.
Lastly, it is to consider that, in an evolving technological environment, it is crucial for the trade sector to align with the ITCs in the adoption of advanced technologies and digital tools such as online programs, software or cloud storage, in order to further improve the efficiency of international trading processes and set the groundwork for a new landscape of digital and digitally traded goods and services.
1 Organization for Economic Co-operation and Development. Digital trade - OECD. (s. f.). OECD. https://www.oecd.org/trade/topics/digital-trade/