Related News

Xalts founders on trade finance digitalisation after Contour acquisition

eBLs would boost shipping decarbonisation push, data shows

Swift says CBDC testing for trade payments showing positive results

Sinopec executes ‘world-first’ first oil product eBL trade

GSBN, Cosco complete blockchain-based biofuel certification pilot

Last month’s demise of TradeLens, a blockchain-powered supply chain ecosystem, caught many in the industry by surprise. Speaking to GTR, Bertrand Chen, CEO of the Global Shipping Business Network (GSBN) – first revealed by GTR in 2018 as a rival to the AP Moller-Maersk and IBM backed platform – explains why he believes his company will succeed where TradeLens failed, and outlines his plans to collaborate with industry players such as Contour, Bolero and the Digital Container Shipping Association (DCSA) to digitise trade.

GTR: GSBN’s stated objectives are almost identical to those of the now-defunct TradeLens initiative. What is the lesson learned for you from TradeLens’ failure, and are GSBN’s days also numbered?

Chen: TradeLens had a really a strong team and they did the best they can. I am impressed by how long they lasted and the network they were able to build with all the constraints they had. They worked very hard and it’s a real shame that it ultimately didn’t work.

I think this is probably the most exciting time for GSBN since its inception because we have a chance to rethink our position and tell our story for the first time without being compared with TradeLens.

We have two tracks on which we want to create products and to enable collaboration. The biggest one – and the one that has always been our focus from the beginning – is paperless trade. In that, we have cargo release, the electronic bill of lading (eBL), and the trade finance solutions. It’s simply about getting rid of the paper and creating value for everyone in the system.

The second angle was always something that we had in mind, but the situation with TradeLens helped us focus on exactly what we are trying to solve, which is what business problem is at the core right now for a lot of shipping executives and even banks that we have not yet addressed? It is environmental, social and governance (ESG).

Decarbonisation is a big problem that nobody knows how to solve. We happen to have a network of shipping lines, terminals, and everybody involved in the shipping industry. The EU just announced that they are going to include shipping in their emission trading system starting 2024, so the industry has to do something. But the problem is that even if you take all of the action to become greener, how do you measure and track it? This is still a very analogue process, but we are sitting on the infrastructure that can enable it to be digitised.

GTR: TradeLens was a for-profit entity between Maersk and IBM while GSBN is a non-profit consortium. How does this work in practice and is GSBN sufficiently independent to gain trust?

Chen: In my opinion TradeLens failed fundamentally because of its for-profit model. If you build a platform where you have all the data, you can make a lot of money. But the biggest mistake when you look at it this way is that it means that you have to go big bang. You have to build a massive team. You have to go for the big prize at the beginning, and they chose visibility. Visibility is hard. Not because of the technology, but because you have to get so many people to give you data and put it on the same platform, and because of the for-profit model, they couldn’t get the necessary trust from other shipping lines to achieve this.

Another reason for its failure is that TradeLens tried to solve two problems at the same time: building an application that the customer uses, and sharing and storing the data using blockchain. Our observation is that in order to succeed, you need to separate these two issues out. You cannot play both because there is an indirect conflict of interest if you are at both the platform level and the application level.

We think the infrastructure should be more like a data utility platform. For this to work, we need to be not just independent and neutral in name but also in fact.

Now, if that is the way we go ahead, then only certain people will want to fund you. Let’s be very clear: you are not a shareholder of GSBN to make the big bucks. We set expectations with our shareholders very differently than TradeLens right from the beginning. GSBN’s shareholders believe in the vision of digitisation and the need for secure infrastructure. They know that it will take time and money to build. That’s why from the get-go we never had a big bang approach. We are not going to have 300 people running around connecting to everyone, because we are not competing on how many terminals are on our network or how much data throughput we have. What we are competing on is whether we can solve for a real business use case that people actually benefit from. That is my KPI: not how many transactions are processed but how much value has been created for the end-user. And that is a key differentiation.

GTR: What therefore is the incentive for shareholders to continue to invest in GSBN?

Chen: If a shipping line shareholder wants to build a product to solve for their end customer, they cannot build the entire stack, because each terminal won’t want to create connections to every shipping line because of the cost of integration. They want to connect the same framework to a single entity.

All the shareholders who have joined GSBN believe that you need to have a non-profit infrastructure to allow for the exchange of data, and, because we are not-for-profit, we can collaborate with a lot of people. We have zero commercial incentive to steal business from the application builder. So if tomorrow, a solution provider like Wave hosts their application on top of GSBN, we are not going to create another eBL to compete with them. On the contrary, our independence and our neutrality are key and we don’t want to betray that trust.

GTR: In June this year, an eBL application built by tech provider IQAX for GSBN was approved for use by the International Group of P&I Clubs (IGP&I). Do you plan to continue developing that eBL, and how do you intend to achieve scale?

Chen: GSBN simply provides the infrastructure. We have a bunch of APIs that enable anyone to build an eBL solution on top. For eBLs to really take off, you need to solve not only the problem of the banks but also the problem of the shippers and all the processes that happen before and after the shipment.

If you imagine all these processes as Lego bricks that can be built on GSBN, as a solution provider you can come in and solve a problem for a particular business in one niche area or specific trade lane. You just take all the Lego bricks, build the solution and solve the problem. And you can completely dominate that market instead of releasing a very generic solution that doesn’t actually serve people’s needs too well. There’s a massive opportunity for smart people to build a service using those APIs, and that is where the value is going to be created.

GTR: How do the data governance frameworks being developed within the GSBN dovetail with those being developed by the DCSA?

Chen: The work that the DCSA is doing is very important and I’m very impressed by the progress they have made. They are coming up with ideas and concepts and the next stage is to find someone who can implement them. I have been very upfront with the DCSA about my aim, which is to work hand in hand with them on the interoperability proofs of concept. We can connect to CargoX, essDocs, Bolero and so on through APIs. That is almost resolved. The real problem is the legal aspect around who is liable if something happens in the transfer between two platforms.

But it’s not just about the eBL. The interesting part is more, can we connect GSBN with Bolero’s Galileo? Can we connect with Contour? Any type of front-end where we can access multiple banks through one platform is something that is valuable to us. Now, I also recognise that in the next 12 months, the banks are pinching the dollars and are less likely to do things, which means we need some very clear propositions from the get-go. Collaboration is the direction I want to go in.

GTR: What is your timescale to make this work?

Chen: Because we are a not-for-profit, my commercial burden is very low, so I don’t have to be in an adversarial negotiation position asking people to give me x amount of money. The key thing though is I don’t have an infinite amount of time. I need to choose the right people to talk to and ascertain which are the good initiatives and which are the ones that are going to go nowhere. This is something I am still learning. Our costs are very low, which I believe is our competitive advantage. If we can cover the cost of the servers and our very minimal staff, then this thing is workable.

GTR: As the number of failed initiatives continues to mount, is blockchain’s time up in trade?

Chen: Let’s not get side-tracked by the failures of we.trade, TradeLens and even [cryptocurrency exchange] FTX. It is easy for people to say that the technology doesn’t work, but what you need to succeed is a combination of regulation, legal, business model and technology. I still believe 100% that blockchain technology is right for the problem we are solving. However, there are new technologies coming in such as confidential computing, and in this we have partnered with Decentriq in Switzerland and AntChain in China, so if we can solve a business case, we can deploy it in Europe, in the US, and in China.