CargoSmart’s new blockchain initiative promises to speed up the sharing of shipping industry information with banks and other stakeholders.
CargoSmart, which describes itself as “a leading shipment management technology solution provider”, has successfully completed a proof-of-concept with eTradeConnect, a multi-bank blockchain consortium based in Hong Kong.
The company said it explored different ways to improve global trade through enhanced collaboration among shippers, banks, terminal operators and ocean carriers, with applications to be further developed once a Global Shipping Business Network (GSBN) is formed.
Facilitated by PwC in conjunction with such shipping lines and banks as OOCL, COSCO, HSBC, Bank of China (Hong Kong), Bank of East Asia and Standard Chartered Bank (Hong Kong), the proof-of-concept was designed to validate the hypothesis that linking supply chain data with trade finance transactions can provide enhanced transparency, traceability and efficiency for member banks and their trade finance customers.
In order to apply for financing services, current practices require companies to provide banks with shipping documents for validation, something that, CargoSmart notes, can take significant time.
In a press statement CargoSmart said the proof-of-concept connects two blockchain networks to exchange information under what it calls a strong data governance model. With the consent of their customers, banks in the eTradeConnect network would be allowed to access relevant historical records provided by ocean carriers and terminals. In so doing, they would thus be able to shorten the customer validation process, with a better understanding of customers’ backgrounds and with real-time, credible shipment event data.
CargoSmart also said that eTradeConnect member banks would also be able to leverage trusted data to streamline their trade finance approval operations; improve their risk management; and enhance their abilities to extend credit to small and medium enterprises (SMEs). As a result, borrowers, CargoSmart asserts, will find it easier to meet their funding needs and to seize more business opportunities.
“Finding ways to improve the level of efficiency in how the shipping industry exchanges information and documents have always been a monumental challenge,” OOCL co-CEO Andy Tung is quoted as saying. “The success in this proof-of-concept is a very positive direction forward to not only tackle this challenge head on, but to take it a step further by broadening the scope of stakeholders, such as financial institutions, to be a part of this open and transparent digital ecosystem. We certainly look forward to seeing more of these kinds of forward-thinking technologies and collaborations being implemented for the collective good of all stakeholders.”
As the proposed counterpart of eTradeConnect, the GSBN, CargoSmart says, will be a not-for-profit organisation that “will work with authorities to comply with all applicable regulations concerning information handling and data privacy. At the same time, the GSBN will also develop standards in this new area of business-to-business data exchange while operating a data exchange platform for supply chain participants around the globe. This platform, CargoSmart stated, is expected to follow strong data governance while data contributors retain control of their data. Furthermore, the platform will it claimed, be transparent and fair in order to encourage participation by all stakeholders.
“The successful completion of a proof-of-concept with eTradeConnect marks a positive beginning of a collaboration between carriers, terminals and banks to explore new products and value propositions for trade finance,” says Hutchison Ports group managing director Eric Ip in the press release. “We are excited about the potential benefits this can bring to the supply chain. Once GSBN is established, we are confident future members will benefit from its strong data governance, and trusted transactions will help simplify trade for end customers.”