Blockchain technology is being used ever more frequently to expedite and digitise old international trade practices. Bureaucratic inefficiencies often mire supply chains. Companies often need to wait for physical copies of documents to be generated, signed, and circulated amongst all the relevant parties before goods and currencies can officially change hands.
The introduction of blockchain technology to the process is modernising trade in several industries. Most recently, DLT Singapore launched a Software as a Service platform with 124 partners.
Blockchain-powered trade platforms have emerged in commodity trading, agriculture, and international shipping.
Earlier this month, some of the world’s leading oil companies and banks joined together to launch the first blockchain-based platform for energy commodity trading.
Oil firms Shell, BP, and Equinor, have teamed up with ABN Amro, ING, and Société Générale to establish a trading platform called Vakt. The platform is initially designed to finance the oil trade, however, in the long-term the idea is to use it to finance other commodities such as wheat or metals. “The platform will focus on post-trade processing to create a single source of truth for the trade lifecycle, eliminating reconciliation and paper-based processes.”
The platform is being developed in partnership with the tech company ConsenSys, and it will be backed by the large trade finance consortium, Komgo.
Komgo includes fifteen of the world’s largest banks and corporations. Komgo is aiming to dominate the blockchain revolution in international commodity trading. Financing physical commodity trading is an onerous and complex task. Monitoring the whereabouts of goods, dealing with complex financial transactions, all the while needing to keep track of huge piles of paperwork, has never been simple.
For that reason, blockchain has been seen as a technology that, if properly implemented, could offer industry participants a massive windfall.
Komgo’s inception represents a sort of industry consensus that it is finally time to do the heavy lifting required in implementation to reach the benefits of digitisation. The World Economic Forum has produced research arguing that a full-scale blockchain revolution in trade finance could boost the industry by $1 trillion.
Agriculture is another industry where some big names have committed to cleaning up trade practices by introducing the necessary technological reforms.
Last month, four of the world’s largest agribusinesses announced a plan to digitise shipping transactions by using blockchain and AI.
Archer Daniels Midland, Bunge, Cargill, and Louis Dreyfus are spearheading the first transactions on the blockchain in agri-trade. The four companies are also aiming to get other agribusinesses on board by encouraging general industry participation in the effort.
Earlier this year, in August, the global shipping giant Maersk made a joint announcement with IBM the creation of TradeLens – a blockchain powered shipping solution. TradeLens already includes participation from more than 20 port authorities around the world, the shipping company Pacific International Lines, and customs officials in the Netherlands, Saudi Arabia, Singapore, Australia, and Peru.
Maersk and IBM’s initiative will be used not only to track documents and facilitate transactions, but it also boasts of IoT technology that can monitor container weights and measure temperatures on board.
While these partnerships and consortiums have had their roots in different industries and as various amalgams (some being real consortiums and others just corporate alliances), they seem to be setting the course for inevitable competition over who will offer the best, modern solutions for international trade.