Introduction: Blockchain is a transformative new technology, like artificial intelligence (AI), big data analytics, machine learning, and Internet of Things (IoT) innovations. In the popular press, there is a lot of commotion regarding cryptocurrency, a type of blockchain-enabled investment. The volatility of cryptocurrency is well known. You can kill, you can lose your shirt, regulators fear it; the risk is real when investors are speculating with cryptocurrency. I think the concerns surrounding cryptocurrency speculation are hampering the larger conversation about the core technology, the blockchain. Blockchain technology has the potential to provide major efficiency and security gains for international supply chains.
Current situation : There has been no significant technological change in international business operations since the introduction of email 30 years ago. Currently, all stakeholders in international transactions (manufacturers and producers, banks, buyers, sellers, shipping companies, customs brokers and freight forwarders, truckers, customs administrations and insurers) must have their own separate files and databases with all documents related to a specific transaction. Typical documents filed multiple times by multiple actors include purchase order or contract, letter of credit, bill of lading, warehouse receipts, commercial invoices, payment documents, and proof of receipt. A calculation for a cut flower export from Africa required 200 separate communications involving 30 actors such as farmers, freight forwarders, land carriers, customs brokers, governments, ports and carriers to move a shipment to the country. ‘Europe. Data tracking systems have no digital compatibility and use repetitive, manual, expensive, inefficient, insecure and time-consuming means. Today, mandatory requirements for digital deposits for import and export must be filed through electronic “one-stop” systems which vary by country. These numerous inefficiencies in the overall international supply chain process add up to increased costs for the businesses and consumers involved.
Blockchain as a registration system: Now is the time to make significant improvements to supply chain management systems. Blockchain technology is a transformative tool to manage records transparently and securely. It offers every participant a complete record of every transaction with every actor involved in the movement of goods from the factory or farm to final delivery. Blockchain is a marked improvement over current processes as it uses end-to-end encryption to ensure both data security and a permanent, immutable (unmodifiable) and verifiable record of every step of the movement of goods.
Trust and identity: These blockchain features allow parties that have no relationship of trust to engage in reliable transactions without relying on intermediaries or a central authority (eg, a government or a bank). Each user of a blockchain has a secure identity and only certain parts of it can be viewed by other participants in the blockchain process. Not relying on a central intermediary not only reduces the costs of international business transactions, but also opens up new avenues of collaboration between stakeholders and improves transaction efficiency by removing an unnecessary step in the supply chain process. .
Smart contracts and DPI: “Smart contracts†are one of the key innovations of the Ethereum blockchain and can be used to program automated functionality into business processes built on the Ethereum blockchain. Smart contracts can automate the fulfillment of contractual obligations and prevent fraud (transfers of ownership of goods are only made when conditions are verified digitally). Producers, manufacturers, shippers, distributors, retailers and customers rely on the authenticity of products, believing that a mark on the invoice is in fact that mark, and not a cheaper counterfeit. One of the little-known benefits of smart contracts on a blockchain is that they protect intellectual property rights (IPRs) by providing a complete record of documents and product movements. With blockchain technology, products can be linked to non-fungible tokens at the time of creation and these tokens serve as digital certificates of title. Thus, the documents conferring ownership of goods can be traced from the creation of the good to its final consumption.
Marketing benefits: Information hosted on a blockchain can provide many benefits to retailers and customers. The distribution of specific goods can be managed and tracked by smart contracts to give businesses better control over IPRs and distribution channels. Businesses can use smart contracts to track asset ownership, to provide better recall, warranty, and maintenance information to owners. The blockchain also allows customers to seamlessly view the digital record of a specific product, from raw materials to final purchase.
Sensors and Blockchain: Many types of goods require special handling, such as perishable agricultural products, chemicals, hazardous materials, etc. For shipping these materials, sensors can be built into shipping containers to record location, temperature, and potentially other measurements. The data collected by the wireless sensors can be recorded on the blockchain. Buyers can confirm that the goods have received the required processing and can view the status of their goods in real time on the blockchain.
Customs processing: Blockchain records can allow importers to provide explicit compliance information to customs authorities regarding the ownership, authenticity, handling, component sourcing, country of origin and price of goods. Electronic filing allows officials to perform risk assessments in advance and expedite customs clearance. Most databases are now compiled on a central hub which slows down data access and increases the risk for hackers and cybercriminals. Blockchain-enabled software and services can increase the speed and security of collecting and tracking relevant information.
Companies that are building a blockchain for commerce: “With IBM, Maersk created a platform ready to bring the entire business ecosystem – liners, warehouses, freight forwarders, ports, customs, exporters, importers and trade finance banks – to interact with each other on a blockchain-based data exchange platform. In this system, all players have an overview of the entire business transaction, access all related documents and share data and information; no entry can be changed and all entries are updated on everyone’s screens in real time. The platform has already been piloted to ship flowers from Kenya, mandarins from California and pineapples from Colombia to the port of Rotterdam. Each participant can also see the status of customs documents or consult bills of lading and other data in real time. The data is secure because no party can modify, delete or even add any of the blocks without the consent of all other members of the network. (CSIS leverages blockchain for U.S. business and prosperity: 10 use cases, 10 big questions, 5 solutions).
Emerging Blockchain Service Providers: Another company that builds blockchain processes is Covantis. Covantis is building a secure digital platform to minimize operational risk while increasing market efficiency for the entire commodities and trade and shipping industry. Covantis is currently working with a number of companies in the agriculture industry to manage the shipping and fulfillment of bulk commodities such as corn and soybeans from Brazil to optimize the trade fulfillment process. export. Covantis has partnered with the market’s leading technology provider ConsenSys (the largest Ethereum-based blockchain business incubator), Microsoft Azure and Cognizant to leverage their solutions and services and provide an innovative technology platform to transform global business operations for agricultural products. The first users of the platform are ADM, Bunge, Cargill, COFCO, Louis Dreyfus Company and Viterra.
Summary: Blockchain technology is breaking new ground in an industry that has remained technologically stagnant for over 30 years. Blockchain technology also reduces costs and improves the efficiency of the current operation of international supply chains. Not only does blockchain technology improve the existing workings of international supply chains, it also has the potential to innovate and reinvent how supply chains work and how stakeholders collaborate. I believe the efficiencies and cost reductions will lead to a significant competitive advantage for companies that adopt blockchain technology, and ultimately benefit the consumer at the end of the supply chain.
Here are some resources for this topic:
Blockchain for global commerce and commerce – Consensys is the leading Ethereum-based blockchain solutions company whose CEO, Joe Lubin, was a founding member of Ethereum. https://consensys.net/blockchain-use-cases/global-trade-and-commerce/. The related article contains resources on international commodity trading, global trade finance, trade settlement, distribution control, transparency, and verified ownership.
Harnessing Blockchain for U.S. Businesses and Prosperity: 10 Use Cases, 10 Big Questions, 5 Solutions, by lead author Kati Suominen, with Andrew Chatzky, William Reinsch and Jonathan Robison, November 2018. https://www.csis.org/analysis/harnessing-blockchain-american-business-and-prosperity.
WTO Blockchain and Commerce Forum 2021
https://www.wto.org/english/res_e/reser_e/blockchainforum2021_e.htm#
Blockchain and DLT in commerce: where are we now? This white paper was produced jointly by Deepesh Patel and Emmanuelle Ganne. November 2020. https://www.tradefinanceglobal.com/posts/tfg-partner-up-with-icc-and-wto-and-the-global-blockchain-forum/