Block-chain technology provides key functional functions that adapt to the supply chain environment and business needs in international trade and transportation.
- Auditable by third parties
- Immutable data
- High degree of automation
But what do these technical characteristics mean in terms of applications and improvements to current processes?
In terms of applications, Block-chain in international trade and transportation could solve.
5 key business of the Block-chain
1. Transparent and secure paperless trading with Block-chain:
Including bills of lading, certificates and letters of credit.
Provides access to the document path and any changes to these documents, whether they are purchase orders, reservations, or invoices.
It ensures the authenticity and integrity of the documents, as well as the transfer of title. An immediate value is avoiding fraud in double billing factoring, for example.
2. Easy procurement and contracting:
The contract can be registered and converted into a “smart contract” * to allow control and automation of its execution.
Block-chain guarantees the irrevocability of these contracts.
These smart contracts can include self-executing features, including payment obligations at the granular level.
Reservation cancellation fees, as well as detention and stay expenses can be invoiced and paid in a clear and consensual way with the potential use of cryptocurrencies.
Block-chain can manage and process warranty claims quickly and automatically.
3. Real-time traceability of goods:
As well as certification of data such as certificate of origin or proof of delivery. Record digital and verifiable events.
The ability to verify the origin of products and their execution in transportation is valuable.
Especially for sensitive cargo such as medicine, food and some consumer goods.
Banks, insurance companies, customs and cross-border agencies can get immediate value in these applications.
4. Real-time traceability:
Of transactions and their correspondence with physical flows.
It can be of great help in automating business finance and asset-based inventory financing.
5. Distribution of information to a network of partners through direct processing:
This without the need for data alteration. It enables collaboration platforms and data pipelines.
Saves time and improves data quality, avoiding multiple data transfers or entries, and reduces the risk of disclosure.
Some applications can be seen in cargo release at terminals, for example.
There are multiple initiatives carried out by large companies or startups in these key fields.
However, Block-chain technology is still not enough in certain areas.
These are the challenges that will be addressed in the coming years in order to have a full implementation beyond simple proof of concept.
The main obstacles are:
- Lack of strong governance, legal framework, and compliance
- Lack of data controls
- Need for standardization
- Management of related costs and business models