Address logistics barriers to unlock cross-border e-commerce benefits, new paper urges


e-commerce is not only transforming global retail markets but the entire trading system as traditional B2B flows (usually in shipping containers) are replaced by fragmented B2C or even C2C parcel volumes. This has led to what could be called the ‘democratisation’ of trade as micro, small and medium-sized enterprises (MSMEs) now have the capability to access global markets, once the preserve of multinationals, through digital platforms.

The evolution of the market has been aided by the adoption of the WTO’s Trade Facilitation Agreement (TFA) which has at its heart the goal of expediting the movement, release and clearance of goods and bringing about the effective cooperation between customs agencies and other regulatory authorities. Full implementation of the agreement could, the WTO believes, reduce trade costs by an average of 14.3%.

However, much must be done if the full potential of this new trading model is to be fully exploited. A new whitepaper, ‘Delivering the Goods: E-Commerce Logistics Transformation’ published today by the World Economic Forum and edited by Ti’s CEO, Prof John Manners-Bell, suggests a number of provisions which should be adopted to encourage the growth of cross-border e-commerce volumes and make the trading environment more inclusive. This has significant implications for developing countries for whom the development of so-called ‘micro-multinationals’ will be critical.

These provisions include:

  • Consider ‘TFA-plus’ provisions which will facilitate rapidly moving, small, low value and returns-heavy e-commerce volumes.
  • Encouraging greater cooperation between public organisations and private businesses, specifically MSMEs. The Global Alliance for Trade Facilitation is an example of how small businesses can be ‘plugged’ into border clearance reform in developing countries.
  • Create a more open environment for international logistics and express operators to invest in domestic transport markets. This would allow access to global networks for home-grown small businesses.
  • Handle tax predictably. Rules are often complex and differ widely from jurisdiction to jurisdiction. This presents traders and logistics companies with a major headache in compliance.
  • Postal modernisation. The role of postal operators is being brought into focus. As most e-commerce volumes are moved through their networks, the way they deal with customs and security, as well as how they implement government policy will be key.

The paper concludes with the message that a number of e-commerce enabling pillars need to be put in place or strengthened which will create a more inclusive trading environment to the benefit of Western consumers and developing countries’ economies. Ignoring the physical goods delivery aspect of e-commerce would be a major omission in the quest to release enormous economic and social benefits.

Source: Transport Intelligence, October 25, 2018

Author: John Manners-Bell