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CargoSmart completes proof-of-concept for cross-network collaboration

CARGOSMART, a shipment management technology solution provider, has successfully completed a proof-of-concept with eTradeConnect, a multi-bank blockchain consortium in Hong Kong facilitated by the Hong Kong Monetary Authority (HKMA)

CargoSmart completes proof-of-concept for cross-network collaboration

CARGOSMART, a shipment management technology solution provider, has successfully completed a proof-of-concept with eTradeConnect, a multi-bank blockchain consortium in Hong Kong facilitated by the Hong Kong Monetary Authority (HKMA)

19 November 2019 - 19:00

CARGOSMART, a shipment management technology solution provider, has successfully completed a proof-of-concept with eTradeConnect, a multi-bank blockchain consortium in Hong Kong facilitated by the Hong Kong Monetary Authority (HKMA).

The proof-of-concept was designed to validate the hypothesis that linking supply chain data with trade finance transactions can provide enhanced transparency, traceability and efficiency for member banks and their trade finance customers, a CargoSmart statement said.



The engagement explored ways to improve global trade through enhanced collaboration among shippers, banks, terminal operators and ocean carriers, with applications to be further developed once the Global Shipping Business Network (GSBN) is formed.



CargoSmart and eTradeConnect completed the proof-of-concept facilitated by PwC, with banks and shipping lines, including Bank of China (Hong Kong) Ltd, The Bank of East Asia, HSBC, Standard Chartered Bank (Hong Kong) Ltd, Cosco Shipping Lines and OOCL.



Under current practice, in order to apply for financing services, companies are required to provide banks with shipping documents for validation, which takes significant time. The proof-of-concept connects two blockchain networks to exchange information under a strong data governance model.



With the consent of its customers, banks in the eTradeConnect network would be allowed to access relevant historical records provided by ocean carriers and terminals. Banks would be able to shorten the customer validation process, with a better understanding of customers' backgrounds and with real-time, credible shipment event data. The proposed solution intends to accelerate the document validation and trade finance process.



In addition, eTradeConnect member banks will be able to leverage trusted data to streamline their trade finance approval operations, improve their risk management, and enhance their abilities to extend credit to small and medium enterprises (SMEs). It will become easier for borrowers to meet their funding needs and to seize more business opportunities.



OOCL co-chief executive officer Andy Tung said: 'Finding ways to improve the level of efficiency in how the shipping industry exchanges information and documents have always been a monumental challenge.



'The success in this proof-of-concept is a very positive direction forward to not only tackle this challenge head on, but to take it a step further by broadening the scope of stakeholders such as financial institutions to be a part of this open and transparent digital ecosystem.'



Digital transformation has swept across many industries in recent years, often in digital silos and mostly without cross-industry outreach.



'The exchange of trusted and immutable data enabled by blockchain gives rise to a seamless and secured linkage across the global trade and financial sectors. The convergence of both worlds will unleash enormous opportunities for global trade and give impetus to international economic growth,' said CargoSmart chief commercial officer Lionel Louie.



As the proposed counterpart of eTradeConnect, the GSBN will be a not-for-profit organisation that will work with authorities to comply with all applicable regulations concerning information handling and data privacy, and develop standards in this new area of business-to-business data exchange. Upon official formation, the organisation will operate a data exchange platform for supply chain participants around the world.



The platform is expected to follow strong data governance while data contributors retain control of their data. The platform will also be transparent and fair to encourage participation by all stakeholders.



HSBC head of global trade Jeanny Ip added: 'As one of the co-funding banks supporting the eTradeConnect platform, we are delighted to participate in the proof-of-concept which will help build a global trade ecosystem and further simplify trading process for our clients.



'Based on the feedback we obtained from previous eTradeConnect pilot transactions, HSBC sees the need and demand for a single platform where clients can facilitate cross-border trade. Clients are telling us that they want a more comprehensive customer journey, one that removes duplication. This is a win-win for all participants of international trade.'


WORLD SHIPPING

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