Can Blockchain revolutionize international trade?
The World Trade Organization has published an analysis of the potential impact of blockchain technology on international trade: Blockchain and International Trade: Opportunities, Challenges, and Implications for International Trade Cooperation.
Potential benefits for the transportation and logistics sector:
- Cross-cutting opportunities to reduce trade costs
- Helping to track ships and trucks
- Enhance supply chain transparency
- Optimizing loading capacity
- Reducing administrative and coordination costs
- Accelerating payments through the use of smart contracts
- Enhancing security and reducing fraud
- Open up new trading opportunities for micro, small and medium-sized enterprises
- Simplifying claim settlement by creating an immutable record of freight history
- Enhancing collaboration between the various companies involved, while at the same time allowing them to retain control of sensitive information and of who knows what and when
Transportation and logistics are the backbone of international trade. The sector constitutes a fertile ground for blockchain implementation due to the high number of actors involved. Having all relevant shipping information shared with authorized partners in realtime on a secure blockchain that guarantees that any data added has not been tampered with, can significantly improve coordination, accelerate processes and cut costs.
There are several projects being developed within i.a smart ports, and shipping and logistics with blockchain components. If the projects succeed, Blockchain could well become the future of trade infrastructure and the biggest disruptor to the shipping industry and to international trade since the invention of the container. However, much remains to be done. Such projects require complex integration work and a conducive regulatory environment. Issues such as whether the technology can be scaled up for large or complex applications, how immune it is to security threats, to what extent various Blockchain platforms can be used in an integrated manner and which legal issues need to be ironed out to increase mainstream use of the technology need to be addressed. They also raise issues of interoperability and standardization. A dialogue between all stakeholders, including regulators, is essential.
- The gains from blockchain technology could deliver $3 trillion dollars of value worldwide by 2030
- Blockchain has the potential to reduce a variety of trade costs substantially, by increasing transparency and making it possible to automate processes and payments
- Cost reduction estimates in the financial sector and the shipping industry range from 15 to 30 per cent of total cost
- According to the World Economic Forum, the removal of barriers due to Blockchain could result in more than US$ 1 trillion of new trade in the next decade
Full report: Can Blockchain revolutionize international trade?