Future-proofing global trade is key to sustained growth. Here's why

Image: Unsplash/Chuttersnap
- Geopolitical tensions, supply chain disruptions and the lingering impacts of COVID-19 have dramatically changed the global trade landscape.
- Stable global trade is key for ensuring economic growth and development and the need to address these issues has never been greater.
- Sustainability, technology use, digitization and realistic trade policy strategies are crucial to strengthening trade in this evolving global landscape.
The global trade landscape has undergone dramatic changes in recent years. Geopolitical tensions, supply chain bottlenecks and the ongoing impacts of the COVID-19 pandemic have created an environment of uncertainty and disruption.
Despite these challenges, stable global trade remains crucial for ensuring economic growth and development. The urgency of addressing these issues has never been greater, as the world faces increasing protectionist measures, rising trade barriers and the need for sustainable practices to mitigate environmental and societal impacts.
Therefore, it is essential to closely examine the current state of global trade and explore strategies to improve the climate for international commerce now more than ever.
The current state of global trade
Despite the challenges, global interconnectedness remains at a record high. Data up to mid-2024, collected through the DHL Connectedness Tracker – a tool for measuring international connectivity and trade flows – shows that international flows are remarkably resilient to geopolitical tensions and uncertainties.
International trade remains a central pillar of the global economy. In 2023, 21% of the value of all goods and services produced was traded internationally, just below the all-time high of 22% recorded in 2022.
Notably, countries that are neither close allies of the US nor China are increasing their share of global trade, bridging geopolitical divides. These geopolitically 'unaligned' countries benefit from shifts in trade dynamics. Additionally, the average distance that traded goods travel has reached a record high, challenging the notion of a broad trend towards regionalization.
The current data thus shows that globalization remains strong. These developments underscore the resilience and adaptability of international trade to geopolitical tensions and uncertainties. Nevertheless, the trade policy climate has deteriorated in recent years.
This decline is evident from the increase in protectionist measures, the rise in trade barriers and the growing prevalence of geopolitical conflicts that hinder international cooperation and free trade.
Societies worldwide would therefore be well-advised to develop and pursue strategies to strengthen global trade – to promote prosperity and combat poverty globally.
Strategies for strengthening global trade
To strengthen global trade in this complex and ever-changing landscape, various approaches must be pursued. Sustainability, technology use, digitization and realistic (trade) policy strategies are crucial.
Sustainable logistics
The trade of goods inevitably leads to increased traffic and associated environmental impacts such as carbon emissions, deforestation and pollution. The rapid growth of global trade has put enormous pressure on natural resources and ecosystems.
To increase the acceptance of trade and minimize its negative impacts on the environment and society, the transformation to sustainable logistics must be urgently advanced. Companies should invest in environmentally-friendly technologies and practices to reduce their carbon footprint and minimize environmental impact.
This can be achieved by electric vehicles, optimization of supply chains and the use of renewable energy. Additionally, standardized certification and labelling systems can help consumers make more sustainable choices.
Governments need to create clear, consistent and preferably internationally aligned policies that support companies in implementing sustainable practices while remaining competitive. Such guidelines provide planning security and promote international competitiveness.
Technology increases resilience
The use of technology is essential to keep trade resilient. Digital platforms, data analytics and automation streamline operations and make supply chains more transparent and efficient. These advancements enable faster decision-making and better responses to disruptions.
For example, companies can use real-time tracking systems and advanced data analytics to identify potential bottlenecks early and take measures to avoid them.
Automation is another crucial component. From automated warehouses to advanced sorting systems, innovative ways are being explored to improve operations and reduce reliance on manual processes. These technologies not only enhance efficiency, but they could also reduce energy consumption and thus contribute to sustainability efforts.
Digitization to overcome trade barriers
The complexity of trade barriers will continue to increase. Technological developments can help meet this challenge.
Digitization is extremely helpful in managing customs processes. However, it also requires appropriate regulatory frameworks that aim not at bureaucracy but at facilitating and accelerating processes.
By using blockchain technology and other digital solutions, companies can improve the efficiency of their customs clearance and reduce processing times.
Pragmatic trade agreements
We have been seeing a shift away from multilateralism towards a power-based system – driven mainly by political actors who focus on economic security and nationalistic tones. It is currently unrealistic to expect a reversal of the trend towards increasing trade barriers.
On the contrary, an increase is to be expected. Liberal, democratic and "value-based" societies need to adapt their strategies accordingly and, for example, increasingly focus on diversifying trade relations and negotiate targeted bilateral trade agreements, which can be focused on a limited number of topics and/or sectors, where agreement is possible.
Collaboration is key
Collaboration is key to managing the complexity of global trade. Governments, businesses and logistics providers must work together to create a more resilient and sustainable trade ecosystem.
This includes investing in infrastructure, promoting innovation and implementing measures to support free and fair trade.
In a time of uncertainty and disruption, it is more important than ever that we work together on solutions to strengthen global trade and secure a sustainable future.
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