Citi Pilots Blockchain Bill of Lading for Trade Finance – Ledger Insights
Yesterday, blockchain trading platform TradeLens announced that Citi was piloting a paperless trade transaction for client Syngenta Bangladesh. Agricultural chemicals were imported into Bangladesh from India with an Electronic Bill of Lading (eBL) used to support the Letter of Credit for trade finance. TradeLens is the blockchain network founded by IBM and a Maersk subsidiary, and TradeLens eBL is one of its main offerings.
Use of eBL is estimated to have reduced the transaction by ten days, as well as paper costs, postage and fees for keeping the container in the port (delay time).
“Trade has traditionally relied on paper-heavy documentation across multiple parties, thereby making transactions complex and riskier,” said Citi Treasury and Trade Solutions Head for Bangladesh, Md. Moinul Huq. “Embracing innovative technologies and platforms brings significant benefits to our customers and to Citi as their banking partner.
TradeLens was used to share and validate all the documents, including the eBL, invoice, packing list and certificate of origin. Digital validation of documents also reduces the risk of false bills of lading.
The transition to standardization, including eBL
The inefficiencies of paper-based commerce were highlighted by the COVID pandemic, with a drop in shipments followed by a massive increase.
Carl Bentzel, Commissioner of the United States Federal Maritime Commission (FMC), recently spoke about the problems with the DCSA.
“Once production started up again, there was a 20% increase in the other direction,” Bentzel said. “These dramatic fluctuations 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 we looked at the problems these ports were having, it quickly became clear that maritime logistics had a data communication problem. Huge amounts of data were being generated without any common data encyclopedia.”
It is something that the World Trade Organization (WTO) and the International Chamber of Commerce (ICC) have taken up with the Digital Standards Initiative (DSI). And for bills of lading, the Digital Container Shipping Association (DCSA), supported by several major container shipping companies, has developed the eBL standard recommended by DSI.
In July, DCSA launched an eBL interoperability proof of concept that included the eBL providers CargoX, edoxOnline, essDOCS and WAVE BL.
We asked TradeLens if the eBL solution complies with the DCSA standard, but we did not receive a response in time for publication.
Citi’s extensive blockchain trade finance footprint
Apart from TradeLens eBL, Citi already has extensive blockchain trade finance activities. It was a founding investor in Contour, the trade finance network that started out focusing on Letters of Credit. It is also an investor in the commodity trade finance network komgo, a participant in Ant’s Trusple for SMBs, and it is involved in the blockchain trade finance market TradeAssets.
