Hong Kong-based blockchain consortium Global Shipping Business Network (GSBN) has set up a trade finance advisory group with three major banks as part of plans to link the shipping and finance sectors to facilitate end-to-end trade digitalisation.
The advisory group is made up of Bank of China, DBS and HSBC, and is tasked with “exploring the technical, legal and regulatory frameworks needed to break the siloes between the global supply chain and financial institutions”, according to a statement. The group will also work together to test digital solutions such as the electronic bill of lading (eBL) and other supply chain data products in order to improve the financing process for banks.
GSBN has been several years in the making. First revealed by GTR in 2018 as a competitor to the IBM and Maersk-built platform TradeLens, it was officially incorporated in March 2021 by eight global shipping lines and terminal operators – Cosco Shipping Lines, Cosco Shipping Ports, Hapag-Lloyd, Hutchison Ports, OOCL, SPG Qingdao Port, PSA International and Shanghai International Port Group – which GSBN says together account for one in every three containers handled in the world.
The platform, which uses technology provided by Oracle, Microsoft, AntChain and Alibaba Cloud, enables the sharing of shipping data and trade documentation among participants. July saw the launch of its first blockchain-enabled solution, called Cargo Release, which it says will cut time for cargo to be document-ready from days to hours.
In late August, GSBN announced a partnership with digital trade finance network Contour, which counts among its backers Bangkok Bank, BNP Paribas, Citi, CTBC, HSBC, ING and SEB, as well as Standard Chartered – which is also a member of TradeLens.
Speaking to GTR last month, Josh Kroeker, Contour’s chief product officer, explained that the partnership with GSBN is aimed at enabling interoperability throughout supply chains.
“For example, if you are an importer and use Contour for your trade finance processes and use GSBN for managing your shipments, port and customs clearance, then interoperability will allow the documents released to you from your bank/supplier in Contour to be forwarded to GSBN for their easy port and customs release process,” he said, adding that Contour is also working with GSBN to determine how both solution providers will incorporate eBLs into their systems.
With the new advisory group, GSBN aims now to bridge gaps in the digitalisation process between the finance and the shipping industries, says Bertrand Chen, the platform’s CEO.
“The Covid-19 pandemic has demonstrated many areas where paper can be eliminated in favour of more efficient, trusted digital systems,” he says. “Given the symbiotic relationship between the shipping sector and finance, we must explore how we can connect with, and enhance, banking processes to bridge the US$1.5tn trade finance gap. Breaking siloes between supply chains and trade finance is a critical part to unlocking new value in global trade, which is why we’re delighted to have three financial leaders join our mission.”
“Through this partnership with GSBN, and other like-minded initiatives, DBS looks forward to enabling wider access to trade financing and services for a truly digital journey across data, physical and financial flows,” adds Sriram Muthukrishnan, group head of product management at DBS.
Although greater collaboration among all parties in trade is indubitably a positive for trade digitalisation, questions remain as to the usefulness of the continued proliferation of digital consortia, all of which are tackling similar issues.
Speaking on this topic to GTR recently, Sam Mathew, global head of flow and financial institutions trade at Standard Chartered, warned of the creation of “digital islands, with limited focus on how to navigate between them”.
There are obvious limitations to the number of digital initiatives that participants can practically join given the effort and investment required, but with few indications that the industry will coalesce around one single solution soon, work is underway to enable the various siloes to at least talk to one another.
This is driven in large part by the International Chamber of Commerce’s (ICC) Digital Standards Initiative (DSI), which is developing open trade standards to facilitate interoperability among the various blockchain-based networks and technology platforms that have surfaced over the past few years.
For now, GSBN, along with its new bank-led advisory group, says it intends to establish network-to-network connections with the trade finance industry to provide a better user experience for the ultimate customer, and work on creating new data products for the whole industry.