by Alexander Paetzold, COO Trade Technologies & MD Trade Technologies Germany GmbH
It is already a well-known fact and widely accepted that with the generation of the so-called “Babyboomers” retiring, the working population in most (if not all) Western Countries will be reduced massively within the next couple of years. To some extent, the decline in the working population has already started some time ago due to i.e. early retirement schemes, but the peak of this effect is yet to come.
The withdrawal of such a substantial portion of the overall workforce has several, and to some extent, considerable negative effects on countries, social societies and on the global economy.
The below highlights two effects that will lead to additional challenges for all parties involved in international trade, such as banks but also exporting & importing companies, as well as freight forwarders and official bodies, which are
- Loss of experience and knowledge in international trade affairs and
- Lack of human resources.
From a somewhat simplified End-2-End point of view, the following aspects are worth to be considered:
- Negotiation of underlying business between seller and buyer – people from the generation of “Babyboomers” can, to a certain degree, do this negotiation based on decades of personal experience and literally centuries of experience within their teams. Once these people leave the workforce, it will be a major task for all players to ensure that this experience, and knowledge, will be secured to the best extent possible for their successors.
- Processing of the relevant transactions – even if the above-mentioned negotiations were commercially successful, and the contract signed, some misunderstandings and/or misperceptions might still lead to an unfavorable outcome for both parties, leading to i.e. delays in shipment / payment, increased transaction costs, difficulties in executing the terms and conditions of the contract, etc. At best, staff experienced in processing this kind of transactions can perhaps still turn the underlying business into a success story. With relatively inexperienced staff in this area however, it becomes much more difficult to achieve the aspired goals.
In addition, it could be quite difficult to keep international trade at current levels or even increase it. Due to its many workflows, today's world of international trade still relies heavily on the manual processing of various tasks. Therefore, the lack of human resources will be of significant relevance.
By embracing new ways in the processing of international trade transactions, with focus on digitization & automation, all parties involved should be able to benefit from the following:
- Digitization & automation will bring more standardization, therefore platforms (with/without the support of AI) will be able to reduce the dependency on human resources in the processing of any given transaction.
- Based on the parameters of the platform and/or the AI scheme used, the experience from the industry as such could be easier compensated and thus support new and rather inexperienced staff in their future endeavors.
For digitization & automation to gain further momentum, the idea would be to develop an easy-to-use technology that is pretty closely connected to today’s setup. This way different workflows can be tackled one after the other depending on what is feasible from a technological as well a legal point of view.