With the recent launch of its first prototype product in collaboration with fintech Ant Group, Hong Kong-based Global Shipping Business Network (GSBN) aims to prove that blockchain can fully digitize the bill of lading process in the shipping industry that has remained paper-based for centuries. GSBN – a non-profit organization controlled by shipping industry stakeholders such as Cosco Shipping and OOC – developed a prototype electronic bill of lading (eBL) to be used as part of Hong Kong’s wholesale central bank digital currency (wCBDC) project, CEO Bertrand Chen told the South China Morning Post.
Since its founding in October 2020, GSBN has been on a mission to use blockchain to digitally transform the global shipping industry and bring it into the 21st century. That effort received a big boost when the Hong Kong Monetary Authority (HKMA) named eBL as one of the six use cases in its wCBDC Project Ensemble launched earlier this month. “I think right now in the world, there’s probably only two locations where the regulators somewhat have a plan or vision of how to do this right,” Chen said. “And I think it’s Hong Kong and Dubai.” Hong Kong’s position as a maritime center and financial hub, along with policy support for blockchain and virtual assets, makes it uniquely placed to embrace this opportunity, according to the executive. The eBL prototype is already being used in the wCBDC project, according to Ant Group’s ZAN, the blockchain GSBN uses for the product. GSBN struck the partnership with Ant last November. The other use cases the HKMA is exploring with the new project are green bonds, carbon credits, aircraft, electric vehicle charging stations, and treasury management.
The bill of lading, a document that confers the right to take possession of cargo, has been paper-based since the Middle Ages. It serves as a title to the goods and is required to receive payment. While the industry has sought a solution to digitize the document for many years, no industry-wide standards have been developed. Blockchain could address weaknesses in earlier systems, as it can be used for digital signatures and proof of ownership, including the tracking of goods. Only 2% of bills of lading are digitized today, according to Chen. Global shipping companies target full digitization by 2030, but change has been slow in the face of complicated challenges that include different legal regimes, Chen said.
Under Project Ensemble, eBLs will be issued on the ZAN blockchain and payments will be made with Hong Kong’s pilot e-HKD. Apart from simplifying the shipping process, a tokenized bill of lading also creates new possibilities for trade financing. Tokenization thus allows for “more complicated scenarios for payment”, and lets sellers get paid faster and easier, Chen said, as reported by the South China Morning Post.
