CargoSmart has successfully completed a proof-of-concept with eTradeConnect, a multi-bank blockchain consortium in Hong Kong facilitated by the Hong Kong Monetary Authority
The engagement explored ways to improve global trade through enhanced collaboration among shippers, banks, terminal operators, and ocean carriers, with applications to be further developed once the Global Shipping Business Network (GSBN) is formed.
CargoSmart and eTradeConnect completed the proof-of-concept facilitated by PwC, with banks and ocean carriers including Bank of China (Hong Kong), the Bank of East Asia Limited, HSBC, Standard Chartered Bank (Hong Kong), COSCO Shipping Lines, and OOCL respectively.
CargoSmart explained 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.
The company explained that under current practice, to apply for financing services, companies are required to provide banks with shipping documents for validation, which takes significant time. The proof-of-concept connects two blockchain networks to exchange information under a data governance model. With the consent of its customers, banks in the eTradeConnect network would be allowed to access relevant historical records provided by ocean carriers and terminals.
Banks would be able to shorten the customer validation process, with a better understanding of customers’ backgrounds and with real-time, credible shipment event data. The proposed solution intends to accelerate the document validation and trade finance process.
OOCL co-chief executive officer Andy Tung said “Finding ways to improve the level of efficiency in how the shipping industry exchanges information and documents has always been a monumental challenge. 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.”
CargoSmart chief commercial officer Lionel Louie added “The exchange of trusted and immutable data enabled by blockchain gives rise to a seamless and secured linkage across the global trade and financial sectors. The convergence of both worlds will unleash enormous opportunities for global trade and give impetus to international economic growth.
“The proof-of-concept with eTradeConnect has demonstrated the power of trusted networks. CargoSmart will continue to bridge the shipping industry with other sectors for supply chain excellence to create value for all stakeholders.”
As the proposed counterpart of eTradeConnect, the GSBN will be a not-for-profit organisation once it is formed after all applicable regulatory and antitrust approvals have been obtained. The GSBN will work with authorities to comply with all applicable regulations concerning information handling and data privacy and develop standards in this new area of business-to-business data exchange. Upon official formation, the organisation will operate a data exchange platform for supply chain participants around the world.
The platform is expected to follow strong data governance while data contributors retain control of their data. The platform will also be transparent and fair to encourage participation by all stakeholders.