Container shipping blockchain, the Global Shipping Business Network (GSBN), has partnered with Singapore’s Contour, a blockchain trade finance platform. The alliance aims to enable efficient financing for shipped goods.
Hong Kong-headquartered GSBN is backed by major players in the shipping industry, including container shippers China’s COSCO and Hapag Lloyd, and port operators PSA and Hutchison Ports. Contour is funded by nine global banks, including BNP Paribas, Citi, HSBC, ING, and Standard Chartered.
Exporting goods can be a risky process. Once the goods are loaded on a container ship, the seller loses control. Hence frequently, exporters require Letters of Credit Letter of Credit (LC) in which the buyer’s bank guarantees that the buyer will pay for the content in the shipping container at the agreed time. If the buyer is unable to complete the payment, the LC bank will cover the costs.
Issuing LCs manually is a complex and inefficient process. It involves considerable paperwork, various intermediaries and there are opportunities for fraud or mistakes. The Covid-19 pandemic further highlighted the need to digitize these processes and limit the need for face-to-face contact in trade shipping arrangements. Contour’s solution issues LCs digitally on blockchain.
Meanwhile, GSBN’s first blockchain solution is for Cargo Release. Much like Letters of Credit, releasing cargo at a port involves many parties and considerable paperwork. That’s because there’s a major risk of theft by handing over the goods to the wrong party. The process involves back and forth between shipping lines, consignees, their agents and the port terminal. GSBN said it cuts cargo release from 2-3 days to 1-2 hours by eliminating manual processes.
Through the partnership, the two solutions will be interoperable. This will enable clients such as importers, exporters, logistic service providers and financial institutions to streamline finance and supply chain operations in shipping.
“Today’s global shipping industry is struggling to keep up with the rising complexities of supply chains, markets and economies. Digital transformation is key to addressing these challenges, but this can only be achieved by breaking down the different silos in the supply chain,” said GSBN CEO Bertrand Chen. “This partnership with Contour breaks down another silo by connecting the physical supply chain to the underlying financial system. This will pave (the) way for more trusted collaboration between market participants, as well as a more efficient and resilient global supply chain.”
Contour uses R3’s Corda enterprise blockchain, whereas GSBN uses Hyperledger Fabric.
GSBN was incorporated in Hong Kong as a non-profit earlier this year, after almost two years working on regulatory approvals.