The Future of Trade Lies in Artificial IntelligenceBy Ara Shamirzayan, Chief Technology Officer at Webb Fontaine
World trade is the lifeblood of the global economy. It not only is a vital component in the ongoing operations of businesses (large and small), governments and NGOs around the world, it has the power to grow economies, increase productivity and transform the quality of life for citizens in the nations who are open to international trade.
This year, the value of global trade is steadily on the rise, with the export/import industry moving past the numerous challenges posed by the COVID-19 pandemic in 2020, which are still being felt today. Trade value stood at US$7.7 trillion in Q1 2022, an increase of about US$1 trillion relative to Q1 2021, according to UNCTAD’s Global Trade Update.
For this positive trajectory to continue, the import/export industry needs to be able to mitigate any factors that may disrupt the stability of global supply chains. These can range from transportation failures, price increases, geopolitical turmoil, and more. The key to sustaining the value of international trade – as well as the massive benefits that come with it – is the free and easy flow of goods, products, and services between nations, and how easy they can enter or exit countries.
Technological advancements and automation processes have had a profoundly positively impact on the import/export sector. Where once documentation and classification, manual checks and risk assessment were time-consuming processes, they are now streamlined by trade administration portals. This automation technology not only helps Customs officials and governments allow for the importing and exporting easily, quickly, and efficiently, but they are also an advantage for businesses who depend on moving goods and services for their operations and consumers. This trade facilitation means government officials can process compliant traders faster and more securely.
The industry is starting to see the benefits of AI integration across the digitalisation of the trade ecosystem. An example is the Single Window system that uses Artificial Intelligence (AI) taking automation to the next level. Beyond targeting and managing all areas of import/export processes that used to rely on human interaction – such as capturing data from scanned documents, applying HS Classification codes from commercial descriptions, assessing risks, flagging discrepancies, facilitating payments and more – the Single Window AI applies machine learning to deal with outside factors that may affect supply chains above and beyond administration.
Using the standardised processes (SAFE Framework of Standards provided by the World Customs Organisation – WCO) which most trading nations follow as a baseline, AI is then able to apply localised and geographical legislation into its processes and configurable parameters for the country where the system is being used. This includes national requirements, but also regional and international agreements – such as international trade treaties.
The AI can also react and pivot to dynamic changes – such as a nation exiting a trade agreement, a rise in goods taxation or geopolitical unrest. In such instances, its acquired knowledge can help customs navigate rises in prices, reroute goods through new avenues (due to port or border closures) or apply new risk assessments based on the goods’ point of origin or destination. In extreme instances, data and margins can be manually applied, which then becomes part of the AI’s machine learning’s data bank from which it can draw.
The AI development process is a dynamic activity working in the background to provide all the resources needed to produce solutions.
AI is already powering trade today and will undoubtably continue to drive growth and efficiency in global value chains through the optimization and automation of existing operating models. The evolution of AI-based trade will continue to support countries and firms engaged in trade as they reduce the time, cost, and complexities on trade opportunities.