- The Commonwealth Bank has facilitated the tracking of a shipment of almonds from Victoria to Germany using blockchain.
- Location, environmental conditions, port and rail transitions, and paperwork like customs documentation was all tracked on the blockchain.
- The experiment shows the potential of blockchain technology has to improve productivity in global trade by increasing transparency, reducing paperwork, and proving the quality and origin of goods.
Australia’s biggest bank has overseen the delivery of agricultural goods to Europe using blockchain and Internet of Things (IoT) technology that tracked a shipment in an experiment participants believe has the potential to reimagine global trade.
Working with a range of commercial partners in the supply chain, the Commonwealth Bank tracked a shipment of almonds from Victoria along its journey to Germany.
Storage conditions for the goods were monitored by sensors, and that data, along with location information and documentation, was stored on a custom-built blockchain that facilitated real time updates and could be accessed through a web based app.
The shipment was tracked through its rail and port movements in Australia, and then across the world to its destination port of Hamburg.
Among the many benefits of this platform is the ability to track the origin of the underlying goods and its condition during transport through multiple hands.
Several people involved in the project have spoken to Business Insider about their experience with the project and the promise it holds for improvements in the trade process, with inter-company collaboration being highlighted as a critical factor for success.
“It can’t just be one entity in the supply chain adopting blockchain in isolation – blockchain is a collaborative technology, so it needs cooperation between supply chain participants to fully realise its benefits of efficiency and transparency” said Sylvia Preda, Executive Director, Industrials and Logistics at the Commonwealth Bank.
“One of the key objectives in distinguishing this experiment from other work done in this space was the level of cooperation between parties. This is the only genuine multi-participant supply chain experiment that we’re aware of currently,” Preda said.
Blockchain, the shared ledger technology that powers Bitcoin and involves storing information in “blocks” on a distributed network, has some features that major companies around the world have been considering as a way of making some of the world’s most complex business processes more efficient. One of those critical features is that data added to a blockchain must be verified by consensus, and cannot simply be altered by a single participant, making for highly reliable data that can be trusted by everyone.
While blockchain technology has been used by logistics companies to track goods and by banks to process deals, the Commonwealth Bank experiment involves collaboration by an array of businesses, including the almond producer, land and sea based transport and logistics players with the potential to add shipping documentation and trade finance capability.
Global merchandising trade was worth around $US16 trillion in 2016, according to World Trade Organisation data. The logistical challenges involved in the trade process are vast, but they include uncertainty on the location of products, high levels of paperwork, problems with the timing of payments and a lack of visibility into storage conditions during the transport of goods.
Commonwealth Bank’s blockchain experiment was designed to try and directly tackle some of these issues which can add to costs for both businesses in the supply chain and end consumers.
For example, issues in the transport process that led to damage to products can be pinpointed giving clarity on liability and reducing disputes. Integrating a banking layer means funds can be released more quickly on completion of various services and delivery requirements.
Sophie Gilder, Head of Blockchain, Innovation Labs at the Commonwealth Bank, said: “One thing that came up very clearly from our collaborators is the fact that customer service could be improved just through transparency. If you’ve got greater certainty as to where something is, the condition that it’s in, and when it’s likely to arrive, you can have a much happier customer. Even if there are delays, if you can explain exactly where it is and why, and this can improve their ability to plan.
“The current lack of transparency, where the buyer and seller may have doubts in terms of what is happening between origin and destination, which results in wasted time and effort trying to uncover this information, could be eliminated. Blockchain plus IoT can provide certainty about where the good has come from, where it is now, and the condition that it’s in.”
The sensors that monitored the environmental conditions of the goods through their journey were provided by LX Group, an Australian IoT solutions provider. Simon Blyth, LX founder and Director, said in addition to streamlining paperwork & automating transactions with smart contracts, one of the key benefits of tracking location and environmental conditions was the proof of the goods’ provenance.
“Unlike the way people like to go to a local market and buy directly from a producer, in huge food supply chains around the world,” Blyth said, “you’ve got produce like some meat or some almonds or some orange juice, and you don’t know exactly where it’s come from.”
For some categories of goods, proof of origin could mean the goods can then be sold at a premium, similar to how some high-end goods like wagyu beef are currently sold. It opens up a new breed of product marketing enabling an end customer to be connected with the exact history of the produce. It was all part of “enabling trades to occur in a trusted way with this efficiency that streamlines a lot of really manual [processes] that currently happen,” Blyth said.
With the increasing visibility of blockchain applications over the past year, analysts and technologists have been debating the merits of the technology compared to, for example, a normal centralised but highly secure database.
The complexity of supply chains, the vast numbers of people involved in transporting goods, and the lack of visibility inherent in shipping goods from one part of the world to another make blockchain a strong contender as a solution for global trade.
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