Minister tells tech industry that trade digitalisation could save businesses £225m a year

Thu 29 Jun 2023
Posted by: William Barns-Graham
Trade News

Digital world economy

Cabinet Office minister Baroness Neville-Rolfe yesterday (28 June) told a technology summit that ongoing pilots trialling the digitalisation of cross-border trade could save businesses up to £225m a year in reduced administration, if scaled up.

Speaking at the ‘Border Strategy 2025: Opportunities for Tech Companies & Consortia’ event hosted by techUK, Neville-Rolfe referred to the ‘Ecosystem of Trust’ pilots that have used new technologies such as smart seals, GPS trackers and temperature trackers to create real-time data about goods movements.

Government agencies can use this information to better monitor goods movements and make quicker risk assessments as to whether consignments require checks at the border.

Six pilots

The government oversaw six Ecosystem of Trust pilots earlier this year, including two which were supported by the Institute of Export & International Trade (IOE&IT).

In her speech, the minister said the pilots were successful and showed that the use of readily available supply chain data could reduce the administrative burden around customs declarations processes by 40%. This could potentially save traders an average annual cost of up to £225m when scaled up.

The scheme could potentially use supply chain data to fulfil as much as 80% of customs declarations requirements leading to an 80% reduction in costs, equating to an annual saving of £365m a year for traders over a 10-year period.

Removing non-tariff barriers

Neville-Rolfe said:

“Innovation sits at the heart of our approach to the border. Our pilots have shown that if we can apply this innovation to remove non-tariff barriers to trade, we will make exporting and importing easier and create a world-leading approach to border policy and design.

“The border is one of the most complex systems of policy, technology and process that exists, and government and industry must work hand-in-hand to transform it.”

An evaluation paper of the six pilots will be published this summer and the scheme is a key part of the government’s 2025 Border Strategy.

Exciting times for trade

Ilona Kawka, a digital trade and customs specialist at IOE&IT, who attended and spoke at the techUK event, said Neville-Rolfe’s comments were a cause for excitement for traders.

“It’s pleasing to hear that the government sees that these pilots have been successful and that the potentially significant impact for traders is being recognised,” she said.

Kevin Shakespeare, the director of strategic projects and international development at IOE&IT, added:

“The Ecosystem of Trust initiative, if scaled up, could save considerable supply costs for traders by reducing non-tariff barriers and using real-time supply chain data to reduce the number of border checks conducted on consignments.

“This could help businesses to save costs and reduce on-the-shelf prices for their imported goods, helping to address the ongoing cost-of-living crisis for consumers.”

Digitalisation backers

The IOE&IT has been a significant advocate for the digitalisation of trade and customs processes since the pandemic, with its director general Marco Forgione often quoted in the media talking about the cost savings it could lead to for traders.

He recently cited an example of a large supermarket moving a container of frozen pizzas in an interview with Tech Monitor, saying: “They had over 140 different documents that were required to accompany the trader. It took two customs officials eight hours each to clear and certify everything on the trailer.”

Forgione explains that such inefficiencies “add cost to the project at a time when we are facing record cost of living crises, increasing food inflation and a global logistics meltdown.”

“Anything which reduces delay – which reduces the need for oversight intervention, and speeds the transfer of documents required for the goods to move – is a positive,” he added.

Digital corridors

As part of the Ecosystem of Trust trials, the IOE&IT has been implementing the Trade Logistics Information Pipeline technology that it developed alongside TradeMark Africa for the development of digital trade corridors between the UK and Kenya.

Commenting on the digital corridors, Forgione recently told the Times: “You’ve got security and visibility of all the trade documentations by all the actors, which means that finance costs, insurance costs and logistics costs all reduce because they’re de-risked. You no longer have the need to stop shipments at the border. You can do a review or an audit in-market. It means that trade is simplified, speeded up.”