Data Container for Trade 3.0

Moving goods is easy, moving data is hard! 

When I first embarked on what ultimately became GSBN, I had no idea of shipping’s rich history and container shipping’s significance in the global trade we take for granted today. The most counterintuitive learning was that moving goods in containers across the seas is relatively easy, but moving data across the supply chain is incredibly hard even in this modern era. Indeed, containers simplify the handoffs of goods between various intermediaries involved in trade, enabling efficient and cost-effective global movement of goods. Yet the same cannot be said for documents or data related to a shipment.

However, the game is changing. I believe global trade has entered a tumultuous new era: Trade 3.0. 

This era is characterized by increased complexity and uncertainty, driven by geopolitical considerations, e-commerce, and stricter regulations. There is little room to further optimize the physical movement of goods to address these challenges. Instead, we must turn to the digital realm for efficiency and resiliency by enhancing coordination across the supply chain to handle this complexity. At stake is the very fabric of global trade, the lifeblood of nations.

Trade 3.0

From barter to mercantilism, trade has experienced remarkable growth, punctuated by pivotal trade innovations such as money, Bill of Lading, and Letter of Credit. In the era of Trade 1.0, the physical constraint of moving goods in piecemeal posed a significant challenge. The advent of containers marked the birth of Trade 2.0. Goods could now be seamlessly transferred in 20-foot-long metal boxes between ships, trucks, and trains. This intermodal transportation system reduced logistics costs by more than 95%, lowering the barriers to international trade and substantially contributed to global economic growth.

However, over the past five years global trade has entered a new era. Supply chain professionals have been navigating through one crisis after another, from COVID-19 and the Red Sea crisis, to the recent longshoremen strikes. Incoming tariffs and other trade barriers are also acting as catalysts for reshaping entire supply chains. In response to the unprecedented uncertainty they face, corporations are compelled to diversify their supplier base. If that wasn’t enough, regulators have simultaneously ratcheted up the burden on corporations to provide comprehensive audit trails of their supply chains. Welcome to Trade 3.0!

Trade 3.0 era demands complex supply chains, fast-paced coordination of market participants across the world, whilst maintaining resilience to disruptions without incurring excessive costs. Traditional optimization strategies in the physical realm, such as using larger ships, automated terminals, or network redesigns, are no longer sufficient.

The only promising avenue left is the digitalization of the entire trade process itself, by facilitating the coordination and data exchange between a group of diverse supply chain participants. To achieve this, a novel type of container, a “data container”, is required to facilitate these data handoffs.

eBL as “the” Data Container

There is substantial momentum behind the digitization of Bill of Lading in the form of electronic Bill of Lading (eBL), including commitments from Carriers, legal reform in key jurisdictions and even policy support in certain countries. Yet, if we were solely focused on digitizing documents, we would be missing out on the greatest opportunity from the eBL adoption. Since each shipment is uniquely associated with its bill of lading, eBL could play the role of "data container" to digitalize the entire trade process. 

Beyond a mere pdf on a blockchain, there are 3 additional properties an eBL needs to possess in order to become the “data container”.

• First, eBL serves as a digital single source of truth for a shipment. It can be associated with all relevant data throughout the shipment’s international journey, including certificates of origin, packing lists, commercial invoices, insurance certificates, and visibility data. 
• Secondly, eBL functions as a digital tool to control and grant data access rights for every single shipment. In practice, data should only be written once from the source and shared multiple times. With clear access rights enforced by the eBL data for a single shipment that can be securely shared through a unique “data container” to all parties involved.
• Finally, eBL provides an immutable and up-to-date timeline of the lifecycle of a shipment. It merges the physical supply chain, the financial supply chain, and the regulatory supply chain into a single timeline. Payment flows can be directly matched with the transfer of cargo rights, and customs and tax departments can verify the declarant’s role and the veracity of shipment information.

What is the value of a data container? 

When Malcolm McLean introduced containerization in 1956, it wasn’t immediately apparent the immense value it could create. The system’s development required numerous iterations, including standardization of containers, specialized container vessels, container terminals, chassis for trucks, and railcars for trains. It wasn’t until the system was fully in place that innovative customers realized its potential, capitalizing upon the significant cost savings and competitive advantages it afforded.

Fortunately, data containers can benefit from the existing networks established by physical containers. But this also necessitates a shift in mindset. Today’s customers and carriers alike are looking at eBL as a mere replacement of paper documents. Recently, I had a lively debate with a leading Carrier about the value created by eBL and the commercial model that a Carrier should adopt. When pressed to demonstrate the business opportunities of eBL as a data container, I had to admit that I did not know which use cases will take off and the potential revenue a Carrier could generate from eBL as a data container.

But this is no different to how the Carrier should view a physical container. It was the customers and their network of trade partners that discovered a way to leverage physical containers to create value. Similarly, I believe the same will be true for data containers. There are a lot of innovators out there, eager to use this new digital tool to create new value propositions for the customers. The focus should be on use cases that are either highly manual and costly today or entirely impossible due to the lack of data at scale.

Today, Carriers are in the driving seat by selecting which eBL to offer to their customers and developing their commercial model for eBL. But ultimately it is the entire trade ecosystem that must determine how to effectively utilize the data container to create value for customers.

So what does this all mean? 

The scope to squeeze additional optimization in the physical world is narrowing. In this exciting era of Trade 3.0, resilience and optimization will be achieved through the digitalization of trade by facilitating the handoffs of data across the supply chain using a data container: The eBL.

Only by leveraging the data container can Carriers, Freight Forwarders, Agents, Terminal Operators, Commercial Banks, Insurance Companies, Customs and other stakeholders adapt and thrive in this new world.

During our recent eBL Adoption event in Shanghai, we had the privilege of discussing the concept of eBL as the data container with market practitioners from across China’s entire trade ecosystem. We held workshops to explore new use cases only possible when using eBL as a data container for instance in multimodal scenarios and also involving commercial banks and insurance companies. 

Stay tuned for the detailed report that we will publish soon.