International trade arose from the need of companies and manufacturers to place their products in new markets. Today, with the help of new technologies, trade outside the state borders, is easier than ever. However, the whole machinery is behind it, as well as regulations. Until World War II, the mutual agreements between the two countries regulated the trade between them. Today though, the World Trade Organization supervises and regulates global trade. And from this time distance, we can conclude what are the innovation and best practices in international trade. Saudi Arabia became a member of the WTO in 2005. Shipping and logistic companies in KSA have boomed since then. So we can say that transport is the backbone of Saudi Arabia’s economic growth. We’ll discuss which are the most essential factors and improvements in world trade.
Why are innovations so important in global trade?
When it comes to international trade, progress depends on innovation. Increasing efficiency and productivity depends on innovation. It all comes down to the simpler and faster transfer of goods and services at lower prices. This further affects markets and healthy competition, and also the quality of goods and services. That is why innovation has become a major factor in the progress of international exchange. Not just trade but the development of the global economy as well. And yet globalization encourages new technologies. New technologies and innovations have also affected logistics companies in Saudi Arabia. Its logistic industry has modernized and today it is worth around $18 billion. And is one of the most promising markets in Saudi Arabia.
How do technological innovations affect global trade?
New inventions and practices have always influenced the development of trade. Take for example the invention of the steam engine, which led to a true technological revolution. Today, technologies have advanced so much that we have optical character recognition (OCR) to read container numbers, radio frequency identification (RFID), and QR codes to identify and track shipments. And not only that but the digitization of trade documents was also improved. All of the above has led to more reliable and efficient international trade. But we can only speculate and monitor the overall impact in the years to come. Because new technologies are developing at a high speed. Saudi Arabia keeps pace with the world when it comes to innovation. Shipping to Saudi Arabia is easier than ever thanks to innovation and best practices in international trade.
Artificial intelligence
AI is the innovation and best practice in international trade. It helps companies to trade in a global market, saving time and money. Besides, it helps also to simplify the export process and customs clearance. It is also used to predict and monitor changes in consumer demand. AI can analyze millions of data and calculate optimal shipping routes, and navigate trucks and cargo carriers at ports. Different languages are one of the common barriers in global trade, which AI overcomes easily. It can translate e-commerce search queries, and connect interested parties. Artificial intelligence can very quickly search existing databases and find what you are looking for. This makes it easier for manufacturers and sellers to easily find new markets and new users for their goods and services. For example, it only takes a few seconds to find the air-conditioned warehouse you want.
Blockchain system
Blockchain is a way of recording and keeping transaction data, impossible to breach or hack. It is a kind of activity ledger, which is duplicated and shared across the network of computer systems on the blockchain. In this way, business is led transparently and funds are being tracked without the possibility of misuse. This refers to any type of asset whether it’s money, intellectual property, or real estate. So if you are in the logistics business and have a warehouse in Saudi Arabia, you might want to access one of the types of blockchain. There are several different ways of blockchain networks.
- The private blockchain is a closed and secured database. Only verified and those with permits can access and run full mode. Only an operator or network owner can make changes to the blockchain, and edit or delete entries. Potential members must have an invitation, and their identity and required data are being verified. Operators or smart contracts verify and approve access to the network. Verified users, transparency, efficiency, and immutability of data, are crucial details in finances, supply, logistics, etc.
- A public blockchain is an open network, where anyone can join and engage in basic activities. Perhaps the most famous example of a public blockchain is Bitcoin. The positives are that everyone can make changes to online activities. It’s an authority-free and democratic-run network. And a large number of its users keep it safe from cyber attacks.
- Permissioned blockchain has some features of both private and public blockchains and is most liable to customization. The participants can only execute specific actions approved to them by administrators.
- Consortium blockchain or federated blockchain is a system where responsibilities are equally shared among members/organizations. Together they determine who is allowed to post transactions and handle data.
Digital platforms as an example of innovation and best practices in international trade
It is quite obvious how digital platforms affect the global market and the exchange of goods. However, they also connect service providers and their users no matter the distance. Thanks to them you can sell or buy almost anything online, offer various services, get a job, rent a warehouse or a car, or book a hotel on the other side of the world. You could even rent a warehouse in Riyadh if you want. And all you need is an internet connection and a certain digital platform. Digital platforms have another, perhaps the most crucial part, and that is the community of their users.
The COVID-19 pandemic revealed the need for remote work and services. This has led to a bloom in e-commerce platforms. There are virtually no limits for your business, as long as there is a demand and a market for your services. Amazon is the largest e-commerce in the world, while Shopify is considered the best for business.
3D printing
3D printing technology has found application in almost everything, from medicine to art and design. As far as global trade is concerned, 3D technology has improved logistics and supply chains. Until now, we ordered parts from different manufacturers to make a certain item. Nowadays, 3D printing creates three-dimensional items, layer by layer until the physical item is created. 3D printing production of orthopedic This may reduce the need for global trade to some extent. But on the other hand, 3D production of orthopedic aids, parts for aircraft and machinery, and medicines, has led to an increase in global trade. The speed of production is very important because it enables an uninterrupted supply chain. Time becomes less of a factor, as does distance. 3D eliminates many of the logistical hurdles, costs, and shortages that plague a cargo transport company, for instance. It provides predetermined routes free of obstacles and obstructions.
Mobile Payments
This payment method has led to an increase in the number of people who have gained access to bank accounts. In a couple of years, the number of accounts increased by 20%. One of the mobile payment examples is PayPal. Application for mobile payments PayPal provides its users with fast and secure contactless payments. These payment methods reduce transaction costs, not only for individuals but also for companies. It’s convenient, and efficient, with no queues and waiting. Saudi Arabia also approves so-called mobile wallet companies. After a probe trial, Saudi Arabia Monetary Authority (SAMA) decided to approve the whole commercial release. Halalah and BayanPay are the first two companies to receive licenses for digital wallets. For companies such as a cargo company in Jubail, this paying method made business much easier.
What are the latest innovation and best practices in international trade?
Companies that export products, face various difficulties in doing business. Some of the challenges they face are differences in language, time zones, currencies, regulations, taxes, customs, etc. To keep up with the advanced competition, it is important to analyze and improve the best practices. The evolution of tactics and methods, as well as high-tech innovations, must be continuously monitored and applied.
International regulations
Procedures and policies in global exchange might vary from country to country. Exporters have to pass certain testing, labeling, and licensing of their goods before they sell them. And besides that, those regulations can even change occasionally. There must be no omissions when it comes to international regulations. At all times one must keep up with new changes, forms, and licenses. Otherwise, your business will suffer. Delivery delays can lead to the loss of new orders and customers. Regular checks will prevent that from happening, and affecting the business. All documentation must always be complete and meet the requirements of the importing country. This applies to the road, rail, ocean, and air traffic. We recommend air cargo Bahrain if you need a quick and professional company to transport your stock.
Logistic and regional partners as an example of innovation and best practices in international trade
The above-mentioned difficulties encountered by exporters are easier to overcome with the help of strategic partners. Agreements on border cooperation and permits for goods to move freely, improve regional cooperation. Thus, regional markets are created and trade flows between partners increase. In addition, logistics partnerships can optimize delivery costs in the region by bridging routes. And a more efficient grouping of shipments to a specific destination also saves time but also enhances on-time delivery. An excellent example is the European Union, whose members enjoy the benefits of free trade agreements.
Electronic systems for submission of customs information
Transmission and processing of information prescribed by customs regulations electronically have become a norm. Not only it enables the submission of relevant documents, but also to pay duties online. Complex web-based systems save time and money for traders, but the countries also benefit from them. It is easier to monitor and analyze money flows, and the possibilities of fraud and bribery are reduced. Also, statistical information on the traffic of goods and services is essential for the further strategic development of the economy.
Choosing and adapting to the right market
The market in which you will offer your products plays an important role. It is necessary to analyze the chosen market and to know your business statistics, to see whether it fits your needs. It is also necessary to make preliminary calculations on whether it will pay off at all. The purchasing capacity of the region is one of the main factors when choosing a market. As well as the culture and buying habits of customers. A detailed market analysis can provide answers to all these questions. Once you gather enough feedback, it’ll be easier for you to enter new markets. With the gained experience, you will more easily master new markets.
Adoption of innovation and best practices in international trade has become crucial
Ever since it became a member of the WTO, Saudi Arabia applies new innovation and best practices in international trade. This led it to become a regional leader in the digital economy. Which has a positive impact on all branches of the economy, as well as global trade. Thus it reached 19th place in the world in terms of export volume. And as far as imports are concerned, it is also among the top 20. The increase in the volume of trade further has a positive impact on production. From all this, it can be seen that new technologies, trade, and the economy are closely connected.
