Davos Six Months On: Can we make global trade more efficient, scalable and sustainable?

Davos Six Months On: Can we make global trade more efficient, scalable and sustainable?

Sultan Ahmed bin Sulayem, Group Chairman & Chief Executive Officer | Sultan Ahmed bin Sulayem - Group Chairman & Chief Executive Officer

In business I like to step back from time to time for a reality check: Are we on track? Have we identified the risks? Have we uncovered solutions? It’s the obvious thing to do but it’s even more important for the mega projects and trends transforming our world.

It’s six months now since I discussed global issues in Switzerland’s snow-covered mountains, at the World Economic Forum’s annual meeting. We debated climate change, “Globalization 4.0” and how new technologies will disrupt industries and economies. We also explored how we can make sure they are used responsibly and identified ways they can help to make global trade flow easier. That’s especially important because we know that trade has the power to lift hundreds of millions more people out of poverty.

So let’s have a reality check. Are the new technologies we discussed in Davos making trade and economic development not only smarter and more efficient, but also more sustainable?

The world’s economic centre of gravity is shifting

It would be easy to say that free trade has taken a step backwards since Davos. Talk of trade wars has become the consistent drumbeat of the news cycle. Worryingly, the World Trade Organisation reported ahead of last month’s G20 meeting that the number of restrictive trade measures among the group has risen to a historic high.

What I think we’re seeing here are the ructions triggered by an important change in global trade flows. Economic and social power is rapidly shifting – from Western countries to other parts of our world, especially emerging economies. According to McKinsey, these emerging economies will consume almost two-thirds of the world’s manufactured goods by 2025. This is a sign of economic strength and a shift in the global economy’s centre of gravity. It’s driven by rapidly growing domestic consumption in these markets, especially in China, and is already bolstering the growth of intra-regional trade.

As a result, new trade alliances are forming, such as the African Continental Free Trade Area agreement and the brand new trade deal struck between the European Union and Mercosur, which includes important economies like Argentina and Brazil. New trade routes are also opening up, such as Russia’s northern sea route, where we recently announced our intention to review the feasibility of building assets that will help cut shipping times between the East and West.

What is being traded is shifting as well. One small example: McKinsey also estimates that electric vehicles could account for 17 per cent of all automotive trade by 2030, which will, in turn, reduce trade in auto parts and oil. Technology is also fuelling a significant rise in trade in services like finance and R&D.

The power of digital

To unlock the full economic potential of trade we must use technology to disrupt our own sector. So far, we’ve only scratched the surface, but the big wins are clear: the Internet of Things is already connecting rich, sensor-generated data, which helps to make transportation of goods far more efficient as we can identify capacity and track shipments in real-time. For instance, we are seeing businesses use blockchain to bring greater transparency to their shipments, replacing the old, laborious paper-based processes with a clearer and credible digital trail. Artificial intelligence is also being used to make transportation work better, for example by helping to route cargo more efficiently based on traffic patterns.

Automation is another technology that has begun to revolutionise the logistics supply chain. Take BoxBay, an automated high bay storage system. Eleven stories high, BoxBay can store as many containers as a conventional shipping terminal, but in one-third of the space on land. Because it is fully automated, it offers direct access to each container, cutting out inefficient reshuffling, which reduces costs and improves safety. BoxBay is an exciting development, and it is just one of many examples of how digital technology is beginning to transform logistics and boost the efficiency of global trade.

However, we cannot just focus on the economic benefits of trade alone. The logistics industry must become more sustainable at the same time, and once again, technology will help.

Climate change has been a big topic at Davos for many years now, but we finally have the technologies at hand that will allow us to really bring positive change. It is now easy to identify and prevent empty legs of a journey for shipping containers and vessels alike, which has a positive and cumulative effect on curbing emissions. New technologies like the electric propulsion of DP World Cargospeed, our Hyperloop joint venture with Virgin, could one day make it possible to transport goods at the speed of flight, but for the same cost as trucking—without producing any direct emissions.

Six months after Davos, I am more certain than ever that more efficient logistics are leading to smarter trade in the digital era. And better trade creates economic opportunities for all. As Alibaba Founder Jack Ma said in Davos: “If you create value, there is opportunity.” We are on track to deliver it.