Hong Kong-based blockchain consortium Global Shipping Business Network (GSBN) has reached the proof-of-concept stage for two trade finance products, as it works to link the shipping and finance sectors to facilitate end-to-end trade digitalisation.
First revealed by GTR in 2018 as a competitor to the IBM and Maersk-built platform TradeLens, GSBN 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 uses technology provided by Oracle, Microsoft, AntChain and Alibaba Cloud to enable the sharing of shipping data and trade documentation among participants. Its first solution, Cargo Release, which enables customers to eliminate manual processes and remove any need for physical exchanges of paper documentation for cargo, was launched in July last year, and is currently being tested in Europe.
The two new trade finance products – open account and letter of credit – harness trusted data direct from the shipping industry via GSBN. For open account, applicants can authorise their bank to pull bill of lading data directly from GSBN’s blockchain-enabled platform for their proof of shipment. Meanwhile, for the letter of credit, applicants can authorise their bank to use an electronic bill of lading (eBL) application built on GSBN’s platform to acquire relevant eBL information and instruct a title transfer.
These solutions are the first to come out of GSBN’s trade finance advisory group, which it set up in September last year with Bank of China, DBS and HSBC. The group 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 by GSBN.
GSBN says that its work on breaking down siloes between physical supply chains and the trade finance industry is critical to enabling accessible, fast and equitable access to trade finance – particularly for smaller participants in global trade.
“The global trade finance gap is set to reach US$2.5tn unless we harness technology to cut through the complexities,” says Bertrand Chen, GSBN CEO. “Reaching proofs-of-concepts of trade finance solutions is a testament to the commitment and momentum of this group, that we are accelerating the development of scalable, real-world solutions to bridge this gap.”
The advisory group says it will now explore opportunities to conduct live customer pilots to validate the new protocols.