Blockchain and AI unlocking trade efficiencies
by Ben Poole
A successful cross-continent commodity trade transaction and a new vendor partnership this week have both highlighted both the practical applications for, and benefits of, exponential technologies in trade transactions.
The first example shows how blockchain can be used as the platform to underpin a successful and fast trade transaction. Cargill and Agrocorp, in partnership with Rabobank and other logistics partners, have completed a cross-continent commodity trade transaction of wheat from North America to Southeast Asia on a blockchain platform provided by Singapore-based dltledgers. In the wake of the COVID-19 pandemic, those involved say the transaction demonstrates the power of partnerships to help ensure the global agriculture supply chain delivers food to where it’s needed in a time of uncertainty.
The shipment, valued at US$12m and settled on 1 April 2020 from North America to Indonesia, occurred with six trading partners participating on a common blockchain platform.
Partners included Cargill, Rabobank North America, Rabobank Singapore, ship owner Amarante, shipping agent Transmarine, and agri-commodity trader Agrocorp International. The dltledgers blockchain solution is built on the open-source Hyperledger Fabric platform.
Trade in five days
The blockchain platform provides a repeatable framework for end-to-end digital trade executions, digitising the document and trade execution process. The trade took a total of just five days to settle, whereas traditional trading processes can take up to a month. The platform created a shared, immutable record of the transaction - a single source of truth for all parties.
Cross-border commodity trading is one of the most promising sectors for blockchain, which allows for real-time monitoring by multiple parties, dispenses with concerns about data ownership, and simplifies the exchange of documents in a digital, secure and decentralised manner. The solution is a key way to continue operations within the global constraints of the pandemic.
“We are constantly seeking ways to work with our partners to help make food and agricultural supply chains more inclusive and respond to demands,” said Jennifer Davidson, trade execution lead at Cargill. “We see this transaction as the latest example of how working together and using technology to solve challenges can improve trade, as well as traceability, food safety, nutrition and more.”
“It’s our mission to digitise trade finance operations,” said Rabobank’s key facilitators, Mario Cortinhal in North America and Olivier De Jong in Singapore. “Consensus-driven smart contracts in this deal minimised our time spent on processing documents by more than half. Riding on the success of this test-case, Rabobank is excited to advance the US$10 trillion trade finance industry.”
Other partners involved in the trade also saw the benefits of utilising blockchain in this way:
“We have been engaging in digital trade execution using blockchain for over 18 months now and have been able to increase efficiency internally and externally”, said Abhinav Vijay, sustainability manager at Agrocorp International. “In addition, it is great to partner with Cargill to drive the commodities industry forward. Considering the current world climate and the logistical challenges to move physical documents around the globe, this is just a start and we hope to execute more trades via the platform in the near future”.
“Working with Cargill, Agrocorp and Rabobank to facilitate this deal on our platform has proven our blockchain solution’s ability to go mainstream,” added Samir Neji, CEO of dltledgers. “Our ready-to-use, plug-and-play modules make it relatively straightforward to set up and to implement blockchain throughout a supply chain or cross-border trade flow.”
“What’s interesting here is that each transaction can include multiple unconnected counterparties, represent tens of millions of dollars, and involve the registration of hundreds of different data points into the platform,” said Brian Behlendorf, executive director of the Hyperledger Consortium. “The numbers are truly impressive, but what’s more remarkable is that this is not a proof-of-concept, but real production use.”
Involving AI in document processing
Today’s other news of the use of exponential technologies in the trade process also involves blockchain, and adds in artificial intelligence (AI) as well. Envoy Group has announced that it has teamed up with TradeSun to offer an automated document reviewing process which is designed to significantly reduce the time taken to complete trade finance transactions.
Manual documentation review processes, which are still common practice in trade finance, can take 4-6 weeks to complete and have very little protection against double-entry fraud and human error. This partnership allows Envoy’s clients to remove the margin for human error and complete the document review and validation process in a matter of minutes. This should help mitigate risk and fraud while also expediting global trade.
Envoy is built on enterprise software firm R3’s Corda blockchain platform. Meanwhile, TradeSun uses AI to automate the document reviewing process. Since inception, technologies such as text analytics, entity extraction, AI and natural language processing (NLP) have been added to its offering.
TradeSun is the latest integration into the Envoy platform, following a successful US$13m raise and launch at the start of 2020. The firm also announced a partnership with KYC Hub earlier this month.
“In 2020, the processes that our global trade relies on still are incredibly archaic,” commented Lee Tarone, CEO of Envoy Group. “In order to expediate trade finance and bring it into the modern day, we need to do away with the rubber stamps and paperwork that fill it with risk. Faster, safer trade finance means faster, more effective business for all stakeholders.”
“The world of trade finance has a myriad of moving parts and countless businesses trying to accelerate the process,” added Nigel Hook, CEO of TradeSun. “All of these parts grind to a crawling pace once they reach the manual documentation review process. This is incredibly labour intensive, expensive, and is also subject to human error. TradeSun’s patent-pending deep learning algorithm drives the automation, digitally capturing trade documents and intelligently examining them from a compliance and letter of credit perspective, thereby dramatically transforming productivity and accuracy.”
While manual processes remain prevalent in trade transactions, inefficiencies and errors will remain par for the course. These two stories today point to a smarter trade future, but the steps that still need to be taken to get the entire global trade industry upgraded to accept automation as the norm will still take time.
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