The world of shipping involves several commercial, documentary, operational and financial processes..
While there have been many developments in the industry, a lot of the documentary processes in shipping and freight has stayed much the same for many decades..
- Late receipt of documentation;
- Loss of original documents in transit; and
- The time it takes for documents to be transferred from place to place and party to party for verification and endorsements
continues to be some of the most common and practical reasons for delays in trade transactions..
The consequences of the above could be avoidable charges such as demurrage, detention and/or port storage, possible loss or cargo damage due to non-clearance and abandoned cargo which may be avoidable if not for the delay..
Below is the requirement and the current practice for the transmission of trade documentation..
CargoX Platform, a neutral, public blockchain-based platform is offering to provide a solution which will help to digitalize the trade documentation process using BDT (Blockchain Document Transfer) and reduce document transmission time to 20 seconds..!!
I took the platform for a test drive to see how it works and if it can assist the industry in saving costs and making the process of document transfer simpler, easier, economical and more importantly, secure and safer..
This platform can handle the transmission of over 50 documents in global trade, including documents that require an audited transfer of ownership like the Bill of Lading..
Below is a quick brief of what a bill of lading is or does and what a blockchain is and the importance of safe and secure transmission of this document..
What is a bill of lading..??
Bill of Lading (abbreviated to B/L) is one of the MOST important documents in the whole shipping and freight chain because this is the only document that serves multiple purposes depending on how it has been issued..
A bill of lading has 3 basic purposes or roles..
- Evidence of contract of carriage
- Receipt of Goods
- Document of title to the goods
- Is issued by the shipping line to the shipper in exchange for freight ;
- Is required by the shipper to get his money from the consignee ;
- May be required by the bank in exchange for releasing the goods to the shipper and to ensure they get the money from the consignee ;
- Is required by the consignee to get the release of cargo at destination ;
- Is required by the shipping line in order to ensure they release the goods to the correct party
As you can see, a bill of lading = money and/or goods..
Now imagine this..
You have just lost this all-important original bill of lading…………!!!!!!!!!!
This is a familiar cry from many a shipper or consignee.. This has happened before, maybe happening right now to someone as you are reading this article and will happen in the future..
The loss of this paper document has several consequences, chief among which are:
- delay in getting the release of the cargo ;
- unnecessary storage, demurrage and detention charges ;
- placing of bank guarantees to the tune of maybe 200% of the cargo value to secure release
CargoX Platform aims to eliminate these risks and consequences through the use of its blockchain-based solutions..
What is a Blockchain and how does it work..??
A very simplified explanation of a blockchain is
“A Blockchain is a ledger that uses cryptography, the internet and devices to create, share, transfer, track and secure assets and transactions (represented/organised as blocks) belonging to everyone to fulfil a certain function..
Unless the previous transaction is completed in the chain and shared forward with a timestamp, the next transaction cannot happen..”
Blockchain works as below..
The documentary process followed in shipping for the issuance of a manual/paper bill of lading currently is :
- Shipper receives the order from the importer ;
- Shipper books cargo with the carrier (either shipping line or NVOCC) ;
- Shipper packs the container and delivers to the carrier ;
- Shipper sends their bill of lading instructions to the carrier once the container has been loaded ;
- Carrier issues their bill of lading to the shipper as per their bill of lading instructions ;
- Shipper sends the original bill of lading by courier to the consignee ;
- Consignee receives the original bill of lading from the shipper ;
- Consignee surrenders the original bill of lading to the carrier at destination ;
- Carrier releases the goods to the consignee
With the CargoX platform, all processes up to 4 remain the same and will be done by the concerned parties as normal..
The CargoX platform which can integrate with many ERP systems using API or is just simply available on the web takes care of the safe and secure transmission from point 5 onwards..
How does the CargoX platform work
CargoX works very similar to other API driven software and can be accessed anywhere from any web browser or mobile app and accepts and supports all standard blockchain-authentication mechanisms..
Each user who wishes to transact on the CargoX platform has to be registered in the CargoX system.. Through customer feedback and extensive market analysis, CargoX has adopted a “simplicity is key” approach and as a result, have managed to keep the registration process quite simple..
A simple registration process including a two-factor authentication via email and online confirmation of the platform’s terms and conditions gives you access to generate a blockchain key which is unique to your company..
The users on the CargoX platform are identified based on an Ethereum blockchain technology-based key which is the equivalent of your fingerprint in the platform.. This key is so unique to you that not even CargoX has access to this in case you lose it..
So you definitely need to save this authentication key and/or have a secure back up of this key as this key cannot be restored due to CargoX’s decentralized platform and without this key, you cannot transact with anyone..
CargoX Platform supports all different types of blockchain private keys in the Ethereum environment..
While these keys are created by default on your browser with encryption, those with repetitive business can also upgrade to hardware wallet devices which looks like below..
As the CargoX platform deals with several negotiable documents like the bill of lading, security is naturally a big concern..
But in terms of security, CargoX’s security set up on the front end seems quite strong as it requires each user to do their own KYC (Know Your Customer) with their customers, partners and users..
Only once both parties are verified by each other, they can be connected on the platform..
Only once this connection is established, you can view contacts, share data, information and documents with other companies..
Once the account is all set up and you have purchased enough credits for the transaction, you are ready to handle the transfer of your documents..
The starting point is the uploading of the document into the CargoX platform or importing the document via API.. You can also create a Smart B/L™ as a structured data document and transfer on the platform for transmission..
In the traditional version of the bill of lading, it is physically signed by a signatory authorised to sign the same..
In this case, after a Smart B/L™ (or any other document) is created you can edit it, change, delete, setup properties, metadata, notify parties till it is signed and authenticated..
Once this bill of lading is signed, there can be no further editing and the bill of lading appears within seconds on the platform and is visible only to the parties who are part of this particular transaction and have been verified as mentioned above..
The general chain followed for transfer of the bill of lading is
Issuer (Carrier) ⇒ Shipper (Seller) ⇒ Consignee (Buyer) ⇒ Deliverer (Carrier at POD or their Agent)
Once the carrier receives all their statutory documents and all relevant charges relating to the carriage, they will press the button to transfer the bill of lading to the shipper kick-starting the document transfer process..
If the bill of lading is a “Negotiable Bill”, it may require the involvement of a bank and if the banks are part of the verified chain, the transmission can include them as well and the chain would then look like
Issuer (Carrier) ⇒ Shipper (Seller) ⇒ Nominated Bank (Seller’s Bank) ⇒ Issuing Bank (Buyer’s Bank) ⇒ Consignee (Buyer) ⇒ Deliverer (Carrier at POD or their Agent)
The mode of transmission is a very simple email like mode which makes it easy to transfer multiple documents to multiple parties at the same time..
Each party in the chain can only see and take control of the documents once they receive it in their inbox and only the entity who has the current control of the documents is allowed to transmit it further..
Remember in the traditional form of a bill of lading transaction, for the release of cargo at the destination and to safeguard the release of goods, there are several endorsements required on a bill of lading..
On the CargoX platform where bills require endorsements, all endorsements are done on the chain with each endorsing party using their unique blockchain key to progress to the next stage..
And just like that, all your required trade documentation including bill of lading and other documents like Commercial Invoice, Packing List, Certificate of Origin has been transferred safely, securely, successfully and quickly from carrier at POL to the carrier at POD going through the carrier, seller, bank, insurance, customs, other authorities, and buyer..
Registration and use of the CargoX Platform is free of charge and open to everyone worldwide and so is the open API that is also available..
However, permission to create a Smart B/L™ is given only to entities that are authorised to issue a bill of lading in the real world (remember the declaration at registration) – Carriers (including shipping lines, VOCC, NVOCC or Freight Forwarder)..
The fee can be paid either by the Issuer OR by the first recipient (Pay By Collect) of the document..
All other parties involved in the exchange use the platform for free..
Price varies based on the document type and level of blockchain support..
All services are charged in credits..1 credit costs US$15.. Credits can be purchased in packs directly through the CargoX Platform.. Buying in bulk can help you achieve a better credits/price ratio and multiple billing options are also supported..
Although this is a Blockchain-based activity, to make it easier for customers, CargoX offers their services in the same secure and familiar environment of fiat currency (fancy word for normal paper currency).. Although I admit credit cards or PayPal options would make instant payments possible.. But if you have a structured business practice, buying credits in advance should also not be a problem..
No complications, no small print, no conditions, no options, and no “scary crypto stuff”, customers will still receive a USD or EUR invoice..
Pricing is document-based.. A one-time per-document fee is charged when the document is created on the platform..
The cost of issuing a Smart B/L is considerably less than their current costs of issuing/transporting (paper) B/L.. You can contact the CargoX team to find out more..
As a reference, the first live CargoX Smart Bill of Lading™ processed for the container that was loaded from Shanghai to Koper cost only USD.15/-, approximately 15% of the estimated usual price for a paper document to be transferred through courier services across the globe..
You can contact the CargoX Team for pricing enquiries..
|Activity||Traditional Paper B/L||Smart B/L|
|Change of ownership||by sending original B/L||Instant, from dApp|
|Time in transit||5-10 days||Instant|
|Can be stolen||Yes||No|
|Can be lost||Yes||No|
|Archiving||Expensive paper storage||Included|
|Cargo information & automation (location, temperature, etc)||No||Yes|
Data archive and retrieval seems to be a sweet deal offered by the CargoX platform for the price you pay..
Once you complete the transaction and it is on the blockchain, the platform gives you 10 years of digital storage for all documents, all of which can be kept in the same platform for easy access and retrieval..
Below is a summary of the workflow between the different parties..
When sending documents of title or any other highly sensitive documents to their business partners or customers, companies struggle with slow, expensive, and unreliable paper delivery services..
There is a need for quick and speedy transmission of documents to keep global supply chains moving.. COVID-19 has further accelerated the requirement for electronic bills of lading and speedy transmission of documents..
The CargoX platform based on a neutral, public blockchain fulfils that need not just with an encrypted transfer of ownership documents, but using tried and tested concepts of email and banking transactions coupled with a complete audit trail of events preserving total confidentiality, full data identity, and business privacy..
The advantage of this platform is also that anyone can be part of this platform – whether you are a carrier, shipper, freight forwarder, trucker, bank or anyone in the chain.. As long as you have a need to transmit documents safely and quickly, the CargoX platform caters to it..
Of course, when so many players are involved, something like this is sure to take time to implement fully especially when you need to get all parties together..
But you don’t have to wait till everyone is on board and this platform can be used even between two parties in the beginning and others can be added along the way..
The world of trade and document transmissions will be that much quicker and safer using the CargoX Platform..