According to IBM and WEF experts, Blockchain technology has what it takes to facilitate the workflow of cross-border trading transactions, particularly the handling of document approval processes. Blockchain is the underlying technology behind cryptocurrencies like Bitcoin.
According to technology major IBM Vice President of Blockchain Solutions, Ramesh Gopinath, the traditional way used by supply chains to physically move the large volumes of paper documents for shipping transactions is very vulnerable to fraud, human error and inadvertent delays.
In addition, the administrative costs of processing, moving, verifying and securing the documentation are very high.
“International trade demands a faster, more secure and more efficient way to handle the document approval workflows needed to move goods across international borders. Traditionally, supply chains have relied on the physical movement of large volumes of paper documents leaving the window open for fraud, human error and inadvertent delays.”
Meanwhile, Supply Chain and Logistics Expert Wolfgang Lehmacher said that Blockchain or digital ledger technology (DLT) is slowly but surely entering the goods transport sector via financial instruments like letters of credit, as well as through the digitization of conventional trade and shipping documents
“With roots in financial services, digital ledger technology is making inroads into goods transport through financial instruments, such as letters of credit and through the digitization of traditional trade and shipping documents.”
Key Blockchain-based projects in the shipping industry
Several industry players have launched projects to test the use of Blockchain in shipping transactions. Danish shipping major Maersk has partnered with IBM to test a Blockchain-based approach in tracking shipments.
London-based startup Everledger has also piloted the use of Blockchain to monitor and protect its valuable assets such as diamonds. A consortium of South Korean businesses has utilized the technology to track reefer containers from shipment booking to cargo delivery.
Earlier this year, Wolfgang Lehmacher, head of Supply Chain and Transport Industries for World Economic Forum, has also explored the benefits of Blockchain in international trade focusing on how the technology could overcome usual trade hurdles:
“Blockchain-based open and secure platforms can also bring smaller businesses to the port, either to perform tasks in the terminals or as customers operating in the port. They can easily access the port services and connect with others via the digital port platform. Digital peer-to-peer collaboration tools and payments ease doing business.”
Blockchain helps widen various international trade possibilities by getting rid of the redundant processes while successfully minimizing the costs that usually come with international trades and operations.