Digitisation of cross-border trade during pandemic

28 April 2020


digitisation

Weaknesses within global trade processes have come to fore due to the ongoing coronavirus outbreak. Blockchain is now being leveraged to help address two primary industry challenges related to COVID-19 – the speed of trade and curbing the actual spread of disease.

FoodIngredientsFirst catches up with James Green, Chief Marketing Officer of Singapore-based blockchain provider dltledgers, to further examine how the “urgent need” for the digitisation of cross-border trade is exacerbated during the pandemic.

Blockchain is emerging as an in-demand solution in the agri-food trade owing to its unique structure, security features, and the fact that it negates issues around trust and data ownership. It is used increasingly by companies that wish to digitise processes that present a risk of contagion from COVID-19, such as physical interactions and the passing of documents, notes Green.

“Now, more than ever, there is a need for food producers to find better ways to reach the end customer. A system to help producers and aggregators to manage supply and demand while tracking and authenticating sources, certifications, expiry dates and food standards could take considerable pressure off traditional supply chains. Blockchain can’t do it all, but with the right partners and collaboration, it could take care of a big piece,” he explains.

Digitisation during such trading processes means that transactions can happen with less risk of spreading infection, he further comments. “In some cases, it marks the difference between trades happening and not happening at all. In parts of India, for example, customs authorities have literally stopped physical documents at the border.”

Indeed, contact-free solutions are in-demand as the global workforce is urged to practice social distancing, a practice which could become the new normal Industry is increasingly turning to solutions that help facilitate the ease of remote work. In a recent feature, FoodIngredientsFirst examined how digital solutions – like virtual trade shows and smartphone-enabled “smart trading” – are in the spotlight as companies “adapt, pivot and progress” to navigate the pandemic.

Expedited speed of trade

Traditional trading routes of goods can often take up to a month to complete, because these literally rely on pieces of paper traveling by courier and people present at their desks to receive them. “This invariably causes delays, which have been exacerbated by the pandemic and people working from home. This means that digital platforms like dltledgers are significantly more impactful in the current circumstances,” Green explains.

Singapore-based dltledgers specialises in a blockchain system described as an independent platform aimed at the digitisation of   “inter-enterprise” workflows in cross-border trade. “It enables otherwise unconnected organisations to execute trades on a single, common platform, integrating their in-house software systems where appropriate,” explains Green.

Dtledgers has recently partnered with heavyweight agri-food suppliers Cargill and Agrocorp, together with Rabobank, to explore the use of blockchain for faster cross-continental wheat trading in five days.

Only just getting started

The most common criticism of blockchain is its poor performance versus cloud-based solutions, Green continues. “The dltledgers platform, for example, achieves around 2,000 transactions per second (TPS). By comparison a payments platform like Visa achieves over 50,000 TPS. Universally, work is being done to increase performance in blockchain platforms.

For now at least, cross-border trade applications like dltledgers are not required to manage high volumes. “To illustrate this, the average trade involves around 80 blockchain transactions. This means hundreds of thousands of trades could take place each month comfortably. Even for dltledgers, which oversees large global blockchain networks, with more than 500 nodes, this is not expected to happen for many years,” says Green.

Blockchain is really only just getting started and there is considerable room for expansion within the agri-food and other commodities sectors. “Two factors may accelerate this. On one hand, the global pandemic has shone a bright light on weaknesses within global trade processes and the urgent need for digitisation; on the other, with technology like this, there is a strong network effect,” underscores Green.

“As more organisations adopt the technology, their trading partners and suppliers are drawn in almost automatically and the inertia holding others back from participating diminishes. This is only expected to accelerate as the obvious benefits of digitisation become more widely acknowledged and understood,” he envisions.

Food security

While there is much talk about potential food shortages driven by issues within the supply chain, Green highlights that what is going relatively unnoticed is the huge surplus of produce that is effectively stuck at its source. For instance, potato growers in the Netherlands faced huge losses and a dire forecast of a one million metric ton surplus of French fries, as executives in the sector previously told FoodIngredientsFirst.

“So far COVID-19 has done little to hamper food production. That means crops are piling up, seafood is practically being given away and milk is literally going down the drain. Thousands of livelihoods are currently at risk due to the inability of logistics providers and other supply chain businesses to get produce from farms, fisheries and other sources to the end customer,” stresses Green.

In recent months, governments have been looking into expediting essential freight and transport for workers, as in the EU’s new introduction of “green lanes.” Meanwhile, industry bodies are collectively urging world governments to ensure that import and export markets are kept open during COVID-19.


Published by foodingredientsfirst.com on April 20, 2020
Image by Shutterstock