We are underestimating how many companies want paperless international trade

Santander UK’s recent Trade Barometer survey found that 35% of UK companies trading internationally say bureaucracy is a barrier to trading overseas. At the same time, 45% of all businesses said that they would use electronic bills of lading, a key data set in international shipping and finance, with 65% saying that they would use this facility if the opportunity arose.

With the Electronic Trade Bill completing its legislative journey, this would suggest we are significantly underestimating just how many companies are chomping at the bit to go paperless. Several test projects using digital commercial trade documents have taken place over the last 12 months. Each have delivered between 40% and 90% gains in efficiency and cost savings, enabling companies to increase the speed and flow of their international trade. This matters for all trading companies, but in some cases, such as a company trading in perishable goods or just in time delivery systems, it really matters. In both examples, goods need to cross borders swiftly and without delay. 
Currently, a trade transaction can require up to 40 different paper-based trade documents, many of which are asking for the same information. The process is bureaucratic, slow and costly and can take up to 2-3 months to complete. The opportunity is to stop thinking about documents and to start thinking about data and technology more effectively to simplify the system and remove all the duplicative information requirements. There is real potential to not just improve the current system but to remove swathes of paperwork and process completely.  

It’s not just about trade, either. The Electronic Trade Documents Bill will enable new financial instruments such as electronic promissory notes [ePNs] to exchange money in far shorter timeframes. A recent Lloyds Bank pilot testing the use of ePNs on a domestic land sale delivered an 88% efficiency gain and all the associated cost reductions this brings.  

The Electronic Trade Documents Bill will remove all requirements to use paper trade documentation from the Autumn 2023, including 80% of bills of lading worldwide. After years of advocacy by the International Chamber of Commerce, alongside organisations like ITFA and BAFT, to bring this issue to the attention of governments, we are starting to see tangible progress. By 2026, the International Chambers of Commerce is expecting 60-80% of world trade to be digital with modern laws, standards and rules. Germany, UK and US will all have reformed legal frameworks in place this year, with the rest of the G7 soon to follow suit. Container shippers are on a path to no longer using paper documents by 2030, and 25% of commodity firms will be paperless by 2025.

Worldwide, the trading system is suffocating under a mountain of 40 billion paper documents. It doesn’t need to be that way. While free trade agreements win more headlines and are important to enabling barrier free trade, the economic gains they offer are dwarfed by the massive opportunity presented by removing paper and digitalising trade. This is our chance to radically upgrade how the UK trades with all her international partners, all at once. That opportunity must not go to waste.  

The Commonwealth trade ministers gathering in London in June is a golden moment to reform laws and digitalise trade across the whole Commonwealth. According to The Commonwealth’s own business case, this would deliver $1.1 trillion in economic growth. It’s too good an opportunity to pass up.  
 
Santander Trade Barometer Survey (Spring 2023) 
https://www.santandercb.co.uk/business-insights/trade-barometer