What does the future of trade look like in a post-Brexit world?

Is it too late for a “Happy New Year”? Because it’s certainly not too late to share predictions over what the new year will hold for Chief Supply Chain Officers (CSCOs) and what forces will shape global trade in 2020 and beyond.

2019 underlinedthat global trade is a web of complexity. Yes, cross-border trade is still growing; yet the outlook for trade and investment has darkened over the past year, with trade conflicts proliferating, structural challenges remaining, and business sentiment suffering.

Last year, tariffs also made a comeback as a policy tool for managing trade relations, triggering tit-for-tat retaliation between the world’s most powerful economies. There were fears that this would spiral into unrestricted protectionism and put an already stunted World Trade Organisation (WTO) at further risk of becoming obsolete.

With so much overall complexity, future-proofing is a key objective for businesses wanting to maintain a competitive edge, especially in the face of socio-economic upheavals like Brexit.

Here is what we expect to top CSCOs’ agendas in 2020:


The move to future-proofing supply chains against Brexit

After three years of negotiations, we now know that on 1 February 2020 the UK will have legally left the EU, with a transition period where existing regulations will remain in place until the end of the year.

Nevertheless, businesses remain uncertain about how Brexit will impact trade. This uncertainty is not only hampering planning and decision-making: it continues to fuel concerns that supply chain and customs clearance costs will rise due to border delays.

One thing is certain: legislation will change, and businesses that can’t keep up with the changes will be at risk of non-compliance. They cannot wait any further: to ensure they are Brexit-Ready.

To do this, importers and exporters must stay up to date with all regulatory aspects, from tariff changes to additional licensing requirements. What could be a cumbersome and endless process can be automated with solutions like E2open’s Brexit offering. Businesses can be Brexit-ready within 24 hours leveraging an intelligent application that delivers instant visibility on rules and regulations for any transaction involving the UK: and their Directors can rest easy knowing they are equipped to keep the threat of fines and even jail at bay.


Greening of global trade to take centre stage

Within and beyond Supply Chain, 2019 was dominated by headlines about climate change, with pressure mounting on business and political leaders to reshape the global economy to cut carbon emissions.

This year, climate legislation is expected to include additional responsibilities for businesses to screen products for carbon content and, if necessary, pay a carbon tax for certain imports. The EU is aiming to make Europe the first climate-neutral continent by 2050,implementing a “carbon border adjustment” to encourage carbon reduction efforts. The EU aims to employ a Chief Trade Enforcement Officer to oversee compliance with restrictive climate legislation, which would also incorporate carbon reduction commitments into every Free Trade Agreement (FTA).

Consumers are also putting pressure on businesses to become more sustainable. A recent study by the International Trade Centre found that consumers in the EU are becoming increasingly savvy on what makes a product or company truly “sustainable.” The study found that 85% of retailers reported increased sales of sustainable products over the past five years, with 92% of retailers expecting the trend to continue over the next five years.

We anticipate wider policy changes and green legislation in 2020 as well as more businesses abandoning the take, make and waste model in favour of a more circular economy.


The e-commerce challenge

In 2017, e-commerce accounted for approximately $2.3 trillion in sales.

However, alongside the ability to target a wider pool of global consumers, the online retail environment presents Supply Chain Managers with its own challenges, especially when it comes to managing volumes, customs declarations, classifications and security risks. With e-commerce sales expected to nearly double to a staggering $4.5 trillion by 2021, these challenges are only going to become more complex to navigate.

The EU has already passed legislation: from 1st January 2021, businesses must complete a customs declaration for goods with a value of up to €150, for security reasons and to levy value-added tax, and its exemption for products up to €22 will disappear. The US Customs and Border Protection (CBP) will follow suit.


Technology’s real coming of age

Technological disruption in global trade is a constant. Recently we’ve witnessed technologies such as QR codes and RFID help track and trace shipments, whilst the basic digitisation of trade agreements has had a tremendous impact on the reliability and efficiency of international trade.

2020 will see “next-generation technologies” like Artificial Intelligence, Machine Learning, the Internet of Things (IoT), and Blockchain taking their rightful place in the present, streamlining global trade and enhancing compliance.


It’s time to get compliant

When it comes to global trade and compliance, 2020 is not the year to shy away from the obvious.  Existing trade tensions are here to stay and legislators are already looking at ways to link future regulations for climate change and e-commerce to cross-border activities.

With so much at stake, businesses need to know what stumbling blocks and opportunities they will experience and how they can future-proof their supply chains to stay resilient, agile and compliant. This is no one-off task: it’s a dynamic challenge. But one that can be met with dynamic solutions, allowing CSCOs to focus on strategies that will improve profitability.


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