- Maersk and DBS Bank executed the world’s first international trade using the TradeTrust blockchain framework for issuing an electronic bill of lading (eBL), a pivotal trade finance document.
- The blockchain-based eBL transaction, verified by Singapore’s DBS Bank and India’s ICICI Bank, marks a milestone in achieving a fully paperless trade process involving multiple stakeholders including traders, shippers, and banks.
The Future of Trade is Paperless: Unpacking the TradeTrust Milestone
In a watershed moment for international trade, shipping giant Maersk and Singapore’s DBS Bank, along with India’s ICICI Bank, completed the first-ever international trade transaction using the TradeTrust framework. This public blockchain system, developed by Enterprise Singapore and the Infocomm Media Development Authority (IMDA), enabled the issuance and verification of an electronic bill of lading (eBL).
Decoding eBLs and the Blockchain Impact
At the heart of this digital evolution is the electronic bill of lading, commonly abbreviated as eBL. Historically, the bill of lading has been a paper document that serves as a keystone in trade finance. It bestows effective ownership of cargo and its transfer, often across various international jurisdictions.
The problem? The physical nature of the document made it susceptible to fraud and cumbersome to manage, not to mention the slow and expensive process of couriering it across borders. Enter blockchain, with its immutable, decentralized record-keeping. Blockchain technology converts these pivotal documents into eBLs that are fraud-resistant, quickly transmissible, and considerably more cost-effective.
To illustrate the mechanics of this milestone transaction, Jindal Stainless, the recipient of the scrap metal shipment from Miami to Gujarat, secured a letter of credit from ICICI Bank in India. Maptrasco, the Singaporean commodities firm responsible for the shipment, partnered with DBS Bank to receive the letter of credit proceeds. The eBL was transferred to DBS Bank, verified, and then its ownership was shifted to ICICI Bank via blockchain.
ICICI employed its proprietary TradeChain platform to then transfer the title of the eBL to Jindal Stainless, ensuring secure and swift final ownership transfer when the cargo arrived in Gujarat.
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While TradeTrust has been under development for roughly four years, its effective deployment in this transaction underscores its potential for revolutionizing trade finance. The platform supports Ethereum and Polygon blockchains, obfuscating the need for corporates to deal with the intricacies of gas fees, a blockchain transaction cost typically paid in cryptocurrencies. This serves to ease the adoption curve for traditional enterprises unfamiliar with the nuances of blockchain ecosystems.
The transaction also heralds a leap toward interoperability among eBL platforms. A pressing challenge in the digital transformation of trade finance has been the multiplicity of proprietary eBL solutions. Efforts are underway by organizations like the Digital Container Shipping Association (DCSA) to create interoperability standards. These initiatives aim to make it easier for stakeholders to engage in digital, blockchain-anchored trade without being tied down to a specific platform.
The stage is set for a radical shift towards paperless, blockchain-secured international trade, and this recent TradeTrust-enabled transaction provides an actionable blueprint for the industry.
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