Global Trade Identity can be the cornerstone of paperless trade

(Unsplash, 2019)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Henrik Hvid Jensen, Senior Blockchain Advisor, Trustworks

The digital business era requires organizations involved in global trade to rethink many aspects of their business models. Several enterprises in global supply chains have moved their digitalization focus outward toward the business ecosystems they are part of. Global supply chains are therefore becoming increasingly digital, with interactions happening among several different types of private and public participants who in many cases do not know/trust each other beforehand, but need to do business together for the global trade to work.

A central requirement of such dynamic digital business networks is the ability to make trustworthy use of partners. As such, it is necessary to establish an identity infrastructure that allows participants in global trade to digitally identify and validate the trustworthiness of their partners.

So a common digital Global Trade Identity (GTID) for government and business is a foundational element for the digitization of global trade. Without this, hidden costs and digitization barriers will remain.

GTID could enable the legal entity to use just one identity to dynamically engage in digital interactions with any other actors in global trade – instead of the current paradigm with one identity per digital service provider. The recent World Economic Forum White Paper Inclusive Deployment of Blockchain for Supply Chains Part 2 explains the GTID concept in more detail, and shows that it is technically fairly simple to realize the GTID concept globally.

Here are three examples illustrating GTID’s benefit to global trade:

A Trade Single Window (TSW) allows parties involved in trade and transport to lodge standardized digital information and documents with a single entry point to fulfill all import, export and transit-related regulatory requirements.

UNECE highlights that enabling a single point of data submission at the national level only partially meets the requirements of a global supply chain. Despite the successful implementation of paperless trading based upon a TSW at the national level, many physical documents continue to be generated to fulfill the requirements of trading partners, counterparts and authorities across international borders. To maximize the benefits from a national TSW, coverage should be extended to include the cross-border digital interoperability of all information.

For an importing Cross-Border Regulatory Agency (CBRA) to trust digital trade documents, they need to ensure that the correct CBRA in the exporting country has digitally signed the trade document. Today, many agreements are created bilateral or regional, but it will have a huge cost to realize all such one-to-one identity trusts globally. Instead, a common GTID for CBRAs is a prerequisite for efficient global TSW interoperability. It enables any CBRA to digitally identify and validate the trustworthiness of any other CBRA’s digital signature on any trade document.

A common GTID will remove many of the practical realization barriers for cross-border TSW interoperability and will accelerate the removal of paper documents in global trade.

The Global Maritime Forum reports that recent analysis of shipping movements in nine European ports identified that cargo vessels spent only 60-70% of their port time at a berth and only 40-65% of berth time was used for operations. Managing the uncertainty of when ships are served during a port visit will enable higher fleet and capacity utilization, with a high degree of predictability for arrivals, cargo operations, and departures, generating substantial benefits for all actors in the global transport chain.

There are several initiatives aimed at making global maritime transport chains more efficient via shared situational awareness among the various parties involved in a ship’s call to a port. For example, Port Collaborative Decision Making (PortCDM) allows them to instantly share business-essential information in the form of time-stamp data, enhancing the coordinative capabilities of each involved actor by enabling a common situational awareness.

The identity of the provider of the time stamps needs to be verifiable and trusted at the same time as the consumer of the data also needs to be allowed to access the data. This requires that both provider and consumer identify themselves; a GTID would mean that each actor participating in such collaborative decision-making endeavor would use the same identity across any maritime implementation globally.

Mikael Lind, associate professor at Research Institutes of Sweden (RISE), says: “Due to the self-organized characteristics of the maritime ecosystem, GTID is a highly attractive approach to take. It would be beneficial if 100,000 ships, 3,900 active ports and the multitude number of port call actors would have a way to efficiently, and trustworthy identify themselves and their services”.

Several supply-chain solutions are aiming at giving full visibility of the container transportation process end-to-end. Full visibility means that all supply-chain actors, such as empty depots, trucking companies, warehouses, ports, customs, and shipping lines, must report the planned and actual container handling activities (container stuffed, gated in, discharged, cleared, gross mass verified, etc.). It is cumbersome and costly to register each supply-chain actor with each supply-chain visibility solution. However, when each actor can reuse their GTID, they will immediately be able to submit events, and the supply chain visibility solution can verify the trustworthiness of the submitter on the fly. Until a GTID is realized, full visibility for authorized actors to a container transport will not materialize.

If you do not know who your business partners are, dynamic digital interactions in global supply chains will never happen. Therefore, realizing a common digital Global Trade Identity is a foundational step in trade; industry and governments should give priority in collaboration to realize the GTID concept.