Blockchain for trade:Examples and Lessons from real world implementations

Shantanu Godbole, Ph.D.Senior Manager – Industries ResearchIBM Research - India

A private sector overview of relevant blockchain initiatives

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• Trade Logistics• Tradelens, Bill of Lading (PIL), Global Shipping Business Network, Open Trade Blockchain

• Payments• Ripple, SWIFT, Stellar (Worldwire)

• Trade Finance• R3 Voltron, we.trade, eTradeConnect

• Food supply chains and agricultural commodities• ADM-Bunge-Cargill-Dreyfuss for commodity markets, IBM Food Trust with Walmart/others

Append-only distributed system of record shared across business network

A network of industry participants maintains a distributed, permissioned ledger with copies of document filings, relevant supply chain events, authority approval status, and full audit history; every change results in a new, immutable block

Shared business logic governing what transactions may be written to the ledger

Cross-organizational business processes, such as cargo title transfer, are pre-programmed and built into Blockchain and distributed to and executed on the network, preventing any member from changing the business logic

Ensuring appropriate visibility; transactions are secure, authenticated and verifiable

Cryptography enables permissioned access so only the parties participating in a specific shipment can submit, edit or approve related data

Transactions are endorsed by relevant participants

Information such as documentation filings and authority approvals can only be changed if endorsed by the parties taking part in the shipment; full audit history maintained on the Blockchain

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BLOCKCHAIN: WELL SUITED FOR SUPPLY CHAINSBlockchain addresses the underlying challenges inherent in collaborating across a distributed, fragmented supply chain ecosystem

SHARED LEDGER SMART CONTRACT PRIVACY TRUST

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VISION: SHIPPER-CENTRIC MODEL TO NETWORK MODELInland Transportation

Shippers / Beneficial Cargo Owner

Supply Chain Visibility Systems

Trade Associations

Supply Chain / Transportation Management Systems

Authorities

Financial / Insurance Services

Port Community Systems; Terminal Operating Systems

Freight Forwarders / 3PLs

Customs Systems

Customs Brokers

Inland Transportation

Shippers / Beneficial Cargo Owner

Supply Chain Visibility Systems

Trade Associations

Supply Chain / Transportation Management Systems

Authorities

Financial / Insurance Services

Port Community Systems; Terminal Operating Systems

Ports and Terminals

Freight Forwarders / 3PLs

Customs Systems

Ocean Carriers

Customs Brokers

This requires trust.

Ocean Carriers

Ports and Terminals

Connect the Ecosystem Drive True Information Sharing Foster Collaboration and Trust Spur Innovation

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THE TRADELENS SOLUTION

ECOSYSTEM

PLATFORM

MARKETPLACE

The foundation of TradeLens is its business network — shippers, freight forwarders, ports and terminals, ocean carriers, intermodal operators, government authorities, customs brokers and more. Each entity shares information that can be tracked, stored and actioned across the platform throughout a shipment’s journey.

The TradeLens Platform is accessible via an open API and brings together the ecosystem through a set of open standards. Powered by Hyperledger Fabric blockchain technology and IBM Cloud, the platform enables the industry to share information and collaborate securely.

An open Applications and Services Marketplace allows both TradeLens and third parties to publish fit-for-purpose services atop the TradeLens platform, fostering supply chain innovation and value creation.

AN OPEN AND NEUTRAL BLOCKCHAIN-BASED PLATFORM THAT IS DIGITIZING THE GLOBAL SUPPLY CHAIN AND TRANSFORMING TRADE

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ECOSYSTEM PARTICIPANTS

Engage with the platform as a consumer of shipping information to improve supply chain management, as a means to collaborate with supply chain partners, and as a way to streamline clearance

Shippers/BCOs

NETWORK MEMBERS

TRADELENS CLIENTS

Engage with the platform as a consumer of shipping information, a means to collaborate with customers and supply chain partners, and a way to improve customs brokerage capabilities

Freight Forwarders / 3PLs

Engage with the platform as a consumer of supply chain information for a variety of trade finance, insurance, and other purposes to reduce the risk of fraud and increase speed and flexibility to customers

Financial Services

Provide the transportation plan, information about the status of shipments across the ocean leg, and critical documents such as the BoL; access end-to-end supply chain data in near real-time including events directly from shipper, intermodal, customs and 3PLs

Ocean Carriers / NVOCCs

Provide information about the disposition of cargo within the boundaries of the port/terminal; access near real-time information to enrich port collaboration and improve terminal planning

Ports / Terminal Operators

Provide transportation plans and information on the disposition of shipments carried on trucks, rail, barges, etc.; improve planning and utilization of assets given near real-time access to end-to-end supply chain events for shipments

Intermodal Operators

Provide information about the export and import clearance status for shipments into and out of the country; access end-to-end supply chain information for improved customs clearance and risk assessments

Government Authorities

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Coverage across 6 continents

61 ports and terminals directly integrated in to TradeLens

Data from up to 600 ports and terminals captured by existing TradeLens members

THE TRADELENS PORT AND TERMINAL NETWORK

Ports and terminals directly integrated with TradeLensPorts and terminals contributing data via carriers to TradeLens

Interactive map of TradeLens port and terminal network:

https://www.tradelens.com/ecosystem/

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The TradeLens blockchain is a shared, immutable ledger that records transactions and tracks tangible and intangible assets. Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.

While the power of TradeLens comes from its members, blockchain enables secure distribution and storage of vital information at the heart of the platform.

TradeLens uses the IBM Blockchain Platform which is based on Hyperledger Fabric, an open-source permissioned blockchain where the peer members (“Trust Anchors”) are known to the network based on cryptographic identities.

BLOCKCHAIN

Tamper-proof recording and non-repudiation for all data submitted to the solution.

Verifiability of data against the recorded proof of submission on the blockchain.

Recoverability of the solution from the data recorded on the blockchain.

Provenance and Auditability. All transactions are signed and dated on the ledger.

Privacy of data to ensure that it is only shared with relevant organizations.

How the TradeLens blockchain connects the ecosystem:

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BCO 3PL Drayage Customs & Authorities

Ports & Terminals Carriers Ports &

TerminalsCustoms & Authorities Drayage 3PL BCO

Start c

onsig

nmen

t trac

king

(book

ing co

nfirm

ed)

Empty co

ntaine

r Gate

-in at

desti

natio

n term

inal

Empty co

ntaine

r Gate

-Out

from

depo

t

Contai

ner s

tuffin

g com

pleted

at

inlan

d loc

ation

Gate-in

Full at

expo

rt term

inal

(plan

ned/e

stimate

d/actu

al)

Contai

ner s

electe

d for

inspe

ction

Custom

er Rele

ase

Contai

ner L

oade

d onb

oard

on

Vesse

l

Vesse

l dep

arture

(plan

ned/e

stimate

d/actu

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Vesse

l arriv

al

(plan

ned/e

stimate

d/actu

al)

Discha

rged a

t impo

rt term

inal

(plan

ned/e

stimate

d/actu

al)

Carrier

relea

se

Impo

rt Cus

toms r

eleas

e

Gate O

ut ful

l con

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r

plann

ed/es

timate

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Discha

rged f

rom Truc

k

plann

ed/es

timate

d/actu

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Contai

ner s

trippe

d

Packing List Non-NegotiableBill of Lading

Export Documentation

Advance Declaration

Pre-Paid Invoice

Certificate of Origin

Shipping Instructions

Importer Security Filing

Cargo Specific Certificate

Commercial Invoice

Customs Clearance

Import Documentation

SHIPPING MILESTONES AND SHIPMENT DATA*

STRUCTURED AND UNSTRUCTURED DOCUMENTS*

TRADELENS BLOCKCHAIN BUSINESS NETWORK

Original Bill of Lading

* Note: representative sample only of the data on the platform

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TradeLens can be accessed via the web without integration. Users can engage with essential platform features including the search and track functions and document access through a secure SSO web app.

THE SHIPMENT MANAGER USER INTERFACE

Consignments can be identified by booking, equipment, bill of lading and client reference

numbers.

View shipping events, documents and transportation

plan.

Events are sourced directly from carriers, ports, terminals and other parties to the

shipment.

A single, secure, simplified view across all shipments in the supply

chain

120 plus standardized events published from the source.

Near real-time events directly from the source are instantly visible to all parties to a

consignment.

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TradeLens is committed to the promotion and adoption of standards and interoperability of platforms.

TradeLens is a neutral platform that is available to participants of any party to a shipment, anywhere in the world. The platform provides a way for all major logistics and permissioned participants to immediately contribute to and extract value from the TradeLens network.

STANDARDS AND INTEROPERABILITY

TradeLens will work closely with the advisory board, ecosystem members and standards bodies to help the industry develop and adopt standard codes and data models. The TradeLens data model and access control scheme aligns with UN/CEFACT.

Information standardization

TradeLens is committed to openness, with all functionality surfaced via non-proprietary, publicly available APIs that are designed specifically for ease of integration.

Interface standards

The TradeLens platform has full intentions to follow blockchain-based standards evolving in the industry, inclusive of cross-ledger namespace and transfers or information between ledgers.

Blockchain interoperability

Standards DataLocation: LOCODE, SMDG, Transport: IMO, NMFTATime: ISO8601, Business Objects: UNCEFACT SCRDMIdentity: WCO Trader Identification Number

Standards OrganizationsOpenshipping.org, DCSA*UN, WCO, GS1ISO/TC 307

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TradeLens provides a framework for sharing documents among trade parties, with security, version control, and privacy. Authorized users with the required permissions can upload, download, view and edit documents. The TradeLens document store allows documents to be securely stored and viewed by various parties to a shipment.

DIGITIZED DOCUMENTS

Trade documents are associated with containers, and consignments in a distributed and shared repository, eliminating endless file, folder and email searching for information.

TradeLens supports the use of structured documents. The information they contain can be easily analyzed and interpreted, allowing for greater automation and accuracy.

Each time a document is edited or uploaded to the TradeLens platform, a new version of the document is created and added to the document store, eliminating multiple copies and the inconsistency of identifying the latest versions.

TradeLens uses the Hyperledger Fabric permissioned blockchain to guarantee the immutability and traceability of trade documents.

Participants assigned to the consignment have default access rights based on a unified permissions model

Digitized document benefits

Sea Waybill*

Commercial Invoice *

Packing List *

Booking Request

Booking Confirmation

Shipping Instructions

Export Declaration

Bill of Lading

Pro-Forma Invoice

Arrival Notice

Import Declaration

Health Certificate

Phytosanitary Certificate

Veterinary Certificate

Fumigation Certificate

Inspection Certificate

Certificate of Analysis

Certificate of Origin

Dangerous Goods Declaration

DOCUMENTS SUPPORTED ON THE PLATFORM

Network participants assigned to a consignment can immediately access shared documents and data, never having to wait for a document to be sent.

* Structured support

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The TradeLens platform manages the sharing of data associated with three interrelated “objects” as defined by the UN-CEFACT Supply Chain Reference Data Model standard: Shipments, Consignments, and Transport Equipment.

DATA MODEL

A separately identifiable collection of goods (available to be) transported together from a seller to a buyer, including the shipping arrangements and movement of products including despatch and delivery, regardless of the modes of transport or the contracting/subcontracting relationships.

Shipment

Separately identifiable collection of goods transported together from one consignor to one consignee via one or more modes of transport as specified in one single transport contract.

Consignment

The physical equipment used to hold, protect, or secure cargo for logistics purposes. Currently, containers are supported as Transport Equipment in TradeLens. Since some types of transport equipment are re-used, Transport Equipment in TradeLens is further constrained to an instance of the usage of a piece of equipment within the context of a shipment or a set of consignments relating to the end-to-end transportation of a shipment.

Transport Equipment

SHIPMENT

SELLER BUYER

CONSIGNMENT 1(ORIGIN INLAND)

CONSIGNMENT 2(FREIGHT FORWARDER)

WAREHOUSE WAREHOUSEPORT

CONSIGNMENT 3(OCEAN)

CONSIGNMENT 2(DESTINATION INLAND)

TRANSPORT EQUIPMENT

PORT

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TradeLens permissions are determined through a combination of the organization’s role and the data type. The TradeLens platform then permits access to data according to the permission matrix.

The full Data Sharing Specification is available at here

DATA SHARING

Events

Planned stuffing start ○ ⦿ ○ ⦿ ○ ○ ○ ○ ○ ○ ⦿

Planned stuffing completed ○ ⦿ ○ ⦿ ○ ○ ○ ○ ○ ○ ⦿

Actual loaded on truck ○ ○ ○ ⦿ ⦿ ○ ○ ○ ○ ⦿ ○Estimated gate out ○ ○ ○ ⦿ ⦿ ○ ○ ○ ○ ⦿ ⦿

Actual gate in ○ ○ ○ ⦿ ⦿ ○ ○ ○ ○ ⦿ ⦿

Transport Service Buyer Consignor Consignee

Origin 3PL Agent

Destination 3PL Agent

Export Customs Broker

Import Customs Broker

Request Party Notify Party

Transport Service Provider

Origin Marine

Terminal . . .

⦿ Participant has an obligation to provide (publish) the data, where relevant/applicable ○ Participant has no access to the data

Documents

Booking Confirmation ○ ○ ○ ○ ○ ○ ○ ○ ○ ⦿ ○Shipping Instructions ○ ⦿ ○ ○ ○ ○ ○ ⦿ ○ ○ ○Bill of Lading ○ ○ ○ ○ ○ ○ ○ ○ ○ ⦿ ○Sea Waybill ○ ○ ○ ○ ○ ○ ○ ○ ○ ⦿ ○House Bill of Lading ○ ○ ○ ⦿ ○ ○ ○ ○ ○ ⦿ ○

○ Participant has read access (can subscribe) to the data

. . .

. . .

B L O C K C H A I N E B L P R O J E C T B A C K G R O U N D

• Bill of lading (BL) is in use since16th Century

• Functionalities:Ø Receipt of goodsØ Evidence of the carriage contractØ Title to goods

• Issued by Shipping LineØ Original paper BL (with endorsement)

is used to establish ownershipØ Original paper BL is required to take

delivery of goods

• BL TypesØ Negotiable and Non-Negotiable BL

Shipping Line

3. Surrender BL and take delivery

Shipper/Seller

Shipper’sBank

Consignee’sBank

Consignee/Buyer

1. Issue BL

2.B Transfer BL

2.B Transfer BL

2.BT

rans

fer B

L

2.A Transfer BL

Negotiable BLNon-Negotiable

BL

Payment - LC

Paym

ent -

LC

Payment -LC

E B L P R O C E S S F L O W

Transferring & Surrendering EBL

Sharing EBL (read-only)

Shipper Negotiating Bank Issuing Bank Consignee

Current/Past Owner

Share selectedEBL sections

Customs

Issuing EBL

Shipper

Shipping Line

Submit shipment instructions to shipping line

Shipper

Non-Negotiable

NamedConsignee/ Buyer

Surrender

Negotiable

NegotiatingBank

Shipping Line

IssuingBank

Review shipment instructions

Issue BL with titleassigned to Shipper

Return Shipmentinstructions to

Shipper

S U M M A R Y O F E B L P O C

Document TransferPaper BL EBL on Blockchain

Traditional paper B/L

5-10 days via courier service

With EB/L

in secondsvia blockchain network

Document HandlingPaper BL EBL on Blockchain

EB/L

Fraud

Can be lost

Speed

Security

Paper B/L

Yes

Yes

Slow

Low

No

No

Instant

High

ControlReal-time Title Visibility

& Transfer History (for SL)

PermissionedInformation

sharing

Visibility toentire shipment lifecycle

Compliance

• Audit Trail• Improved workflow management

Summary

ShorterTime

Risk Assessment

ReduceCost

ProvenanceSupport

IncreasedPrivacy

Paper B/L EBL on blockchain

F E A T U R E S Digitization

• Traceable, tamper-proof flowof document/asset

Smart-form of Secure Data

010010110101010110010

010010110101010110010

• Real-time information sharing over the whole BL lifecycle

Issue EBL

Retrieve & Share EBL

Transfer EBL

Surrender EBL

Real -time visibility& Transfer History

API-based Design

EBL

S U M M A R Y O F E B L P O C

Document TransferPaper BL EBL on Blockchain

Traditional paper B/L5 -10 days via courier service

With EB/Lin secondsvia blockchain network

Document HandlingPaper BL EBL on Blockchain

EB/L

Fraud

Can be lost

Speed

Security

Paper B/L

Yes

Yes

Slow

Low

No

No

Instant

High

ControlReal-time Title Visibility

& Transfer History (for SL)

PermissionedInformation

sharing

Visibility toentire shipment lifecycle

Compliance

• Audit Trail• Improved workflow management

Summary

ShorterTime

Risk Assessment

ReduceCost

ProvenanceSupport

IncreasedPrivacy

Paper B/L EBL on blockchain

F E A T U R E S Digitization

• Traceable, tamper-proof flowof document/asset

Smart-form of Secure Data

0100101

1010101

0110010

0100101

1010101

0110010

• Real-time information sharing over the whole BL lifecycle

Issue EBL

Retrieve & Share EBL

Transfer EBL

Surrender EBL

Real -time visibility& Transfer History

API-based Design

EBL

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MARKETPLACE

Platform CorePlatform Core enables the broad sharing of supply chain data including trade documents across permissioned parties in the TradeLens ecosystem.

Third-parties can develop, sell and distribute authorized

applications that leverage TradeLens.

Third Party Applications*

Clear Way*Clear Way applications automate business processes across TradeLens participants by employing workflow technology and blockchain smart contracts.

Other TradeLens Applications*First-party applications for purposes such as reporting, analytics and business intelligence, and trade finance and insurance.

TradeLens has released and is developing a range of applications that sit on top of and leverage the platform.

The TradeLens Marketplace is a channel for developing, selling and distributing authorized applications by third-parties as well TradeLens. TradeLens will provide the technical foundation to enable parties to build and deploy applications. Service offerings can also be made available in the marketplace to support ecosystem members.

* Currently on the TradeLens roadmap and not available today as officially released and supported products

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1 – 2 YEAR OUTLOOK (SUBJECT TO CHANGE)FUTURE OF APPLICATION MARKETPLACE

IBM’s statements regarding its plans, directions, and intent are subject to change or withdrawal without notice at IBM’s sole discretion. Information regarding potential future products is intended to outline our general product direction and itshould not be relied on in making a purchasing decision. The information mentioned regarding potential future products is not a commitment, promise, or legal obligation to deliver any material, code or functionality. Information about potentialfuture products may not be incorporated into any contract. The development, release, and timing of any future features or functionality described for our products remains at our sole discretion.

Blockchain-based workflow enabling a range of documentation use cases across ecosystem participants

Clear Way

Book freight and send shipping instructions direct from the platform and benefit from tight integration with visibility and document sharing

Booking & Shipping Instructions

Simplified, consistent, and auditable means to share dangerous goods documentation across all modes of transport

Cross-mode Dangerous Goods

Paperless transfer of ownership and cargo release on TradeLensmember carriers

Negotiable eBill of Lading

Marketplace offerings from leading trade finance and cargo insurance providers, as well as applications and services for financial services

Financial Services Advance Ship Notification (ASN) automation, AI logistics insights, interoperability with leading blockchain solutions aligned with market needs, and more

Additional Applications

Notifications will work by layering business logic over the data-rich TradeLensplatform and presenting to clients – either through UI or API – information to help further manage their supply chains.

Notifications

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ECOSYSTEM FEEDBACKFrom Early Programs and Two Releases

⦿ Clear definition of information sharing rules in participation agreements is critical to success

⦿ Information sharing must be limited to entities with a legitimate need-to-know

⦿ Preferences must be customizable at scale

⦿ Customs authorities are key to the network

⦿ Technology must be in lock-step with Regulatory/Legal evolution for maximum trade facilitation benefits