In the midst of the complications that the coronavirus presents for the trade of products linked to agriculture, Argentine developments facilitates the electronic transmission of documents through the digitization of processes represent a great advantage, and are already being used by firms like Cargill, Bunge and Dreyfus. In COVID-19 times, this application aims to avoid obstacles to the agricultural trade.
Global Share is a company dedicated to the continuous improvement of business processes, providing innovative solutions to companies to add up value and competitive advantage by improving their processes productivity. One year ago, Global Share announced a major milestone in EdoxOnline history, the brand new development for the preparation, issuance, signing, transmission, negotiation and presentation of the electronic Bill of Lading (e-BL). ZirconTech has been a key partner implementing blockchain technology in the solution architecture in 2018-2019.
The synergy between state of art technology and professional experience in supply chains, logistics and commercial networks, allows Global Share to offer a spectrum of tools and optimization solutions to improve processes. One year ago (on April 2019) Global Share announced the incorporation of blockchain technology to the e-BL platform to position EdoxOnline to the top podium category of companies providing such functionality running within full and extreme security capabilities.
Global Share therefore confirmed its leadership in the agribusiness industry, and has been determined to reach out to the horizon stated in its Vision by adding innovative solutions that help customers receive important benefits as a result of the streamlined processes that these innovations produce.
“The unloading of bulk carriers in China -one of the three largest trading partners of Argentina along with Brazil and the United States- requires the presentation of documentation by the importer, particularly the Bill of Lading (BL), to the carrier and local customs. In the international trade industry to achieve the authorization of the unloading -in the vast majority of cases-, you must send the documents via courier from the exporting country to the destination country, where the importer files to claim ownership of the cargo, either bulk commodities or containerized products”, says a report by Global Share.
Then it notes that the coronavirus “makes visible the problem of delivering paper documents in a complex and global supply chain” and highlights that “the absence of documents is causing significant congestion in the main ports of the Asian giant, and consequently generating logistics costs for delays”. According to the report, the penalty for delay in unloading large ships averages $ 30,000 a day.
“While it is unfortunate that these situations have to bring to light the benefits of electronic document transmission, we hope that the industry as a whole will continue to adopt digital processes to facilitate global trading” said Alejandro Pernias, CEO of Global Share. .
EdoxOnline reportedly recently released the first ever electronic bill of lading with blockchain technology. “It allows a Chinese importer, or any country in the world, to present the necessary documentation to release their cargo in front of the carrier and customs authorities,” he said.
The blockchain based Bill of Lading (e-BL)
Solutions such as the electronic Bill of Lading (e-BL), electronic Phytosanitary Certificate (e-Phyto) and electronic Origin Certificate (e-OC) have been embracing the International Trade of Commodities, thus helping all trading companies go paperless, as they also streamline the whole shipping documents issuance process. On June 11th 2019, the IG (Group of Protection & Indemnity insurance Clubs) approved Global Share S.A. EdoxOnline platform. The legal frameworks for this new generation of e-BL providers’ systems were scrutinized by the IG to ensure that e-BLs created on them are capable of performing the three functions of a bill of lading, namely as a receipt, a document of title and a contract of carriage. Liabilities arising in respect of the carriage of cargo under e-BLs created on these systems are now covered by the IG Clubs as if the bills of lading had been issued in traditional paper form.
The key difference with this second generation e-BL systems is their reliance on blockchain technology. Unlike three years ago, blockchain is today no longer just a buzzword but has many real applications. A blockchain may be a public or a private digital network used for recording transactional events in encrypted form, storing the same in a distributed ledger (i.e. the computers). A private blockchain network can feature a level of centralization. Access is limited by a governing body to a number of participants only. Public blockchain networks however run on thousands of computers and do not have a ‘central administrator’. It is not possible to shut down, block or limit access to a public blockchain network. EdoxOnline’s product is based on the Ethereum blockchain; the best known public blockchain which also enables the use of smart contracts. The publicly distributed ledger contains a permanent record of all transactions, providing transparency and enabling auditability of all events. Without a central registry, there is no central point of attack for hackers.
EdoxOnline is the first e-BL system created implementing blockchain technology. The company was set up in 2007 by a group of international trade experts to provide the industry with a collaborative digital platform to streamline the issuance of shipping and commercial documents. On EdoxOnline’s system, all the participants to a trade, from shippers to customs agents, interact in real-time, reliably, efficiently, and in a secure manner.
ZirconTech helped Global Share in the implementation of the solution that tracks the changes in the documentation over time and ensures tamper proof and no possibility of modifying the information of the same. ZirconTech proposed to identify the documents through hashes (SHA256) and then leave the same “notarized” in the Ethereum blockchain using a document ID and the mentioned hash. Each change in the document is registered using the corresponding ID and hash update. For this project a smart contract was developed using Solidity and an API using NodeJS.
How does EdoxOnline work?
From a user interface perspective, this blockchain based system look very similar to first generation eBL providers approved by the IG but the way in which it works differs. The system encrypt and store all the data associated with the eBL, i.e. the parties involved, their status and the transactions, on a blockchain decentralized network each time a new transaction is performed. Users registering to use the system are deemed to have accepted, and thus be bound by, the terms and conditions of these providers’ multilateral agreements.
Significantly, the service provider running the network is not a principal to the transaction and has no access to the users’ information, ensuring privacy for the users. The system otherwise shares the following similarities with first generation eBL providers:
• The system replicates the process flow and roles performed by the paper BL.
• It has a legal framework governing the use of the system. Users agree to treat electronic documentation within the system as the functional and legal equivalent of paper documents, and undertake not to challenge the validity of any transaction or communication made on the ground that the same was made in e-form, instead of in paper form and/or that it is not signed or sealed. The legal framework is a multilateral agreement between all users and between each user and the system provider.
• The legal framework for edoxOnline comprises of its “e-BL Terms and Conditions”, version 1, dated 18 May 2018, accompanied by its Management User’s Guide.
• edoxOnline relies on the principle of novation to transfer rights and obligations. The parties contractually agree that there is a novation of the contract of carriage each time the eBL is transferred from one holder to the next. On a transfer, the rights held by the transferor are extinguished. The transferee takes those rights instead and becomes a party to the contract of carriage, allowing him to sue the carrier under the same terms originally agreed between the carrier and the shipper.
• edoxOnline also relies on the principle of attornment to enable the new holder of the eBL to obtain title in the goods. The users agree in advance under the terms and conditions that there will be an attornment each time the eBL is transferred.
• The system is accessed via apps and users do not need to invest in special hardware.
• The eBL created on the system can be sent in draft form for approval between the shipper and the carrier, and can also be passed back and forth between holders in this way if, for example, amendments to the document need to be made. Like a paper BL however, there can only be one holder of an eBL at any time.
• The system also offers the possibility to create and to transfer other trade documents such as cargo certificates, invoices, packing lists, etc.
• The system has procedures for switching eBLs to paper BLs at any point in the transactions.
• The system is regularly tested against all forms of cyber attacks, and the providers have insurance for cyber risks and professional E&O risks.
• edoxOnline is free for carriers to use.
Global Share was confident that the EdoxOnline electronic Bill of Lading (e-BL) would meet its customers’ expectations and business needs, going paperless and efficient, and has become a reality.
The UK P&I Club is one of the oldest P&I clubs in the world and has released a report highlighting the benefits of EdoxOnline. The UK P&I Club provides Protection and Indemnity insurance in respect of third party liabilities and expenses arising from owning ships or operating ships as principals. One of the largest mutual marine protection and indemnity organizations it insures over 240 million tonnes of owned and chartered ships from more than fifty countries across the globe. The UK P&I Club gives security with its A (Stable) Standard & Poor’s rating and accessibility with a claims service on hand in 350 ports.
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References and sources:
Global Share announces the launch of Electronic Bill of Lading under Blockchain technology
Zircon Tech helps Global Share to launch Electronic Bill of Ladings using blockchain technology
Argentina: ZirconTech encourages the use of blockchain technology for electronic shipping invoices
Coronavirus: local development aims to avoid obstacles to the agricultural trade
Electronic Bills of Lading – An Update Part I