Yesterday, blockchain trading platform TradeLens announced that Citi had piloted a paperless trade transaction for client Syngenta Bangladesh. Agrochemicals were imported into Bangladesh from India with an electronic bill of lading (eBL) used to support the trade finance letter of credit. TradeLens is the blockchain network founded by IBM and a subsidiary of Maersk and TradeLens eBL is one of its main offerings.
It is estimated that the use of eBL reduced the transaction by ten days, as well as paperwork costs, port costs and container storage costs at the port (demurrage).
“Trade has traditionally relied on paper-heavy documentation between multiple parties, which makes transactions complex and riskier,” said Md. Moinul Huq, Citi’s head of treasury and trade solutions for Bangladesh. “Adopting innovative technologies and platforms brings substantial benefits to our customers and to Citi as a banking partner.
TradeLens was used to share and validate all documents including eBL, invoice, packing list and certificate of origin. Digital validation of documents also reduces the risk of fraudulent bills of lading.
The move to standardization, including eBL
The inefficiencies of paper-based trading have been highlighted by the COVID pandemic, with declining shipments followed by a massive increase.
Carl Bentzel, Commissioner of the US Federal Maritime Commission (FMC), recently spoke about the problems with DCSA.
“Once production restarted, there was a 20% increase in the other direction,” Bentzel said. “These dramatic fluctuations have created extreme resource management challenges at the Ports of Los Angeles and Long Beach, two of the busiest port complexes in the United States. When looking at the problems faced by these ports, it quickly became apparent that maritime logistics had a data communication problem. Huge amounts of data were being generated without a common data lexicon. »
This is something the World Trade Organization (WTO) and the International Chamber of Commerce (ICC) have been addressing with the Digital Standards Initiative (DSI). And for bills of lading, the Digital Container Shipping Association (DCSA), supported by several major container carriers, has developed the DSI-recommended eBL standard.
In July, the DCSA launched an eBL interoperability proof of concept that included eBL providers CargoX, edoxOnline, essDOCS, and WAVE BL.
We asked TradeLens if its eBL solution was DCSA compliant but did not receive an answer in time for publication.
Citi’s vast blockchain trade finance footprint
Besides TradeLens eBL, Citi already has extensive blockchain trade finance businesses. He was a founding investor in Contour, the trade finance network that started out focusing on letters of credit. He is also an investor in the commodity trade finance network komgo, a participant in Ant’s Trusple for SMEs, and is involved in the blockchain trade finance marketplace TradeAssets.