Global Trade Management (GTM) solutions facilitate the timely and compliant movement of goods from point of origination to point of destination, across borders anywhere in the world. Because of GTM, importers, exporters, freight forwarders and customs brokers are able to ensure a seamless, secure and cost-effective flow of goods, data and payments.
GTM introduces the complexities of multiple languages, time zones, currencies and modes of transport. Moreover, there can be more than a dozen parties involved in a single international shipment. And not to mention, the numerous laws governing global trade are exceptionally multifaceted and ever changing, making compliance a top priority.
In this blog series, we will take a deeper dive into how blockchain technology is being applied to GTM to provide more efficient and secure methods for global trade processes. To kick things off, let’s review blockchain and its potential in GTM.
What is Blockchain?
Blockchain is best known for being the technology behind the cryptocurrency Bitcoin. However, Blockchain is much more than an instrument of finance.
A blockchain is an append-only distributed digital ledger that consists of a continuously growing chain of linked blocks, where each block contains a cryptographic hash of the previous block, a timestamp and batches of verified transactions. This iterative process ensures the integrity of the previous block, all the way back to the original genesis block. The blocks cannot be altered retroactively without the alteration of all subsequent blocks and the collusion of the network.
In mid-2018, Zion Market Research reported that global “blockchain technology in supply chain management market was valued at around $40.99 million in 2017 and is expected to reach approximately $666.61 million by 2024, growing at a CAGR of 49.16 percent between 2017 and 2024” (globalnewswire.com 2018).
Applying Blockchain Technology in Global Trade Management
A blockchain is secure by design, making it profoundly suitable for the recording of GTM events and processing of transactions related to GTM activities.
Using blockchain technology driven by GTM applications, a GTM blockchain can reveal previously hidden information and enable users to make informed, automated decisions related to import and export compliance as it affects all areas of international supply chains, from sourcing, to deliveries, to financials. Blockchain’s ability to attach digital tokens (digital assets) to GTM smart contracts gives businesses greater flexibility and extended financial security in finding markets and pricing risks. It creates more efficient dynamic demand chains instead of rigid supply chains with pre-defined participants and fixed long-term contracts.
Now that we have established a foundation of knowledge, stay tuned for the next installment in our blog series where we address and assess the roadblocks associated with blockchain in GTM technology.