The modular design with pluggable components, along with consensus services, enables multiple deployment options. Different groups of peers can implement their own configurable rule sets for consensus and build their own membership services with custom security roles to handle private transactions and execute confidential contracts.
GTM can be separated into four relatively autonomous blockchains:
- Logistics and Freight Forwarding Services
- Import and Export Customs Clearance
- Governmental and Trade Compliance
- Free Trade Zones and Bonded Warehouses Operations.
All these blockchains exchange information between themselves and maintain hierarchical child-parent relations with the main GTM blockchain. Splitting GTM into smaller units will necessitate more coordination and increase maintenance costs without apparent additional benefits. Also, every blockchain must have one or more two-way communication pegs that can further strain resources of adjacent blockchains.
Each childchain is sufficiently self-contained. It is responsible for its own distinct operations, maintains its own audit trails, and retains milestones that are combined into its own Track and Trace (T&T). Requested T&T entries of each childchain are then proliferated into the Global Trade and Compliance Visibility (GTCV) part of the GTM blockchain.
Each GTM childchain is comprised of two parts:
- The conventional permissioned blockchain, with multiple nodes and information distributed among corresponding databases; and
- Off-chain GTM module(s) responsible for calculations and verification of compliance functions with results disseminated into the designated blockchain(s). The off-chain GTM modules contain the centralized global compliance content.
This hierarchy eliminates any redundancy of information, the necessity to repeat calculations on the multiple nodes of a blockchain, and allows the GYM system to maintain computer code and global content – such as Harmonized Tariffs Schedules (HS/HTS), Free Trade Agreements (FTA), or Restricted/Denied Parties Lists (RPL/DPL) – in a single location.
Logistics and Freight Forwarding Childchain
A complete freight forwarding blockchain specializes in arranging storage and shipping of merchandise on behalf of its shippers or consignees. It usually includes tracking inland transportation, preparation of shipping and export documents, warehousing, booking cargo space, negotiating freight charges, freight consolidation, cargo insurance, and filing of insurance claims. Export freight forwarders usually ship under their own bills of lading or air waybills (called a house bill of lading or house air waybill) and their agents at the destination (import freight forwarders) provide document delivery, deconsolidation, and freight collection service. Most logistics functions require manual interventions executed off-chain.
For GTM purposes, only smart contracts responsible for import and export compliance are mandatory. Such smart contracts as inland freight, consolidations, and de-consolidations can be sourced from other specialized blockchains.
Most functions in the compliance category can only be fulfilled by using official content and through communications (in italic) with governmental and trade entities. A partial list of smart contracts:
- Importer Security Filing (ISF) and Additional Carrier Requirements (“10+2”).
- Ocean Export Manifest electronic
- Processing of electronic air manifests.
- In bond shipments reporting and organization with bonded carriers.
- The Automated Export Systemto electronically declare international exports.
- Bookings with cargo carriers and Non-Vessel Operating Common Carrier (NVOCC).
- A Known Shipper verification and application.
- Screening against national and international lists of restricted / denied parties.
- Security assessments and surveys management.
- Consolidation of goods.
- De-consolidation of goods.
- Export classification of goods on the national Harmonized Schedule level.
- Export valuation of goods.
- Calculation of multi-leg landed costs.
- Export Control Classification Number (ECCN) determination.
- Required export and import licenses and permits.
- Required export and import documents.
- Storage and retrieval of compliance documents.
- Logistics data mining and reporting.
Import and Export Customs Clearance Childchain
The customs clearance is the documented permission to pass granted by a national customs authority. It allows for import goods to enter the country or for exported goods to leave the country. The process includes the preparation and submission of documentation and information required to facilitate export or import of cargo, customs examination, assessment, payment of duty, and deliverance of cargo from customs after clearance, along with documentation.
The clearance function always involve time-consuming calculations and sophisticated verifications with heavy demand on databases, and obligatory manual interventions. This mandates the execution of these functions off-chain with result posted in the clearance childchain.
All of the clearance contracts in the blockchain belong to GTM and are mandatory, with the exception of smart contracts responsible for local deliveries of cleared cargo that can be sourced from other specialized blockchains.
Most functions in the compliance category can only be fulfilled by using official content and through communications (in italics) with Customs and other Governmental Authorities. A partial list of smart contracts:
- Importer Security Filing (ISF) and Additional Carrier Requirements (“10+2”).
- Ocean Export Manifest electronic
- Processing of electronic air manifests.
- In bond shipments of goods by bonded carriers.
- The Automated Export Systemto electronically declare international exports.
- Security assessments and surveys management.
- Determination of the most favorable duty treatments.
- Determination and verification of country of origin.
- Import classification of goods on the national Harmonized Schedule level.
- Import valuation of goods.
- Calculation of landed cost.
- Required import licenses and permits.
- Required import documents.
- Filing import declarations to Customs and participating Governmental agencies using a National electronic system.
- Duty drawback calculations and reporting.
- Reconciliation calculations and reporting.
- Calculation of additional taxes and duties, such as antidumping (ADD) and countervailing (CVD) duties.
- Verification of quotas.
- Storage and retrieval of compliance documents.
- Clearance data mining and reporting.
Governmental and Trade Compliance Childchain
Every GTM childchain contains results generated by smart contracts executed on the clearance childchain. All of compliance contracts in the blockchain belong to GTM.
This blockchain is powered by global content sourced from national governmental agencies and trade-related entities. Information is changed daily and availability of historical data is essential. The same information can be stored in multiple languages and displayed in a native cultural format, e.g., dates and numbers. The volume of global content cannot be replicated on blockchain nodes.
The frequency of modifications, additions, and deletions of national rules and regulations requires as frequent modifications to the computer code. Errors in updated programs can have severe negative impact on all GTM blockchains. Off-chain execution of compliance functions in these smart contracts eliminates volume- and maintenance-related problems in the blockchains.
A partial list of smart contracts:
- Screening against national and international lists of restricted / denied parties.
- Security assessments and surveys management.
- Determination of the most favorable duty treatments.
- Determination and verification of country of origin.
- Export classification of goods on the national Harmonized Schedule level.
- Import classification of goods on the national Harmonized Schedule level.
- Calculation of landed cost.
- Export valuation of goods.
- Import valuation of goods.
- Calculation of multi-leg landed costs.
- Export Control Classification Number (ECCN) determination.
- Required export licenses and permits.
- Required import licenses and permits.
- Required export documents.
- Required import documents.
- Calculation of additional taxes and duties, such as antidumping (ADD) and countervailing (CVD) duties.
- Verification of quotas.
- Storage and retrieval of compliance documents.
FTZ and Bonded WMS Childchain
A Foreign/Free-Trade Zone (FTZ) is a specific class of special economic zone. It is a geographic area where goods may be landed, stored, handled, manufactured, or reconfigured, and re-exported under specific customs regulation and generally not subject to customs duty. A bonded warehouse is a secured area in which dutiable goods may be stored, manipulated, or undergo manufacturing operations without payment of duty. Goods can be withdrawn for consumption domestically after payment of duty.
The FTZ process requires import and export customs clearance functionality to move goods out of the warehouses. FTZ contracts do involve time-consuming calculations but each FTZ childchain is isolated, the number of nodes on the blockchain is limited, and nodes can be restricted by a blockchain consensus to specific blocks of transactions. Execution of FTZ functions does not necessitate computerized off-chain operations. A larger FTZ childchain will still benefit from running a centralized off-chain database.
All of FTZ contracts in the blockchain belong to GTM and are mandatory, with the exception of smart contracts responsible for local deliveries of cleared cargo that can be sourced from other specialized blockchains.
Most functions in the compliance category can only be fulfilled by using official content and through communications (in italic) with Customs and other Governmental Authorities. A partial list of smart contracts:
- In bond transfers of goods by bonded carriers.
- Inter- zone transfers.
- Permit To Transfer (PTT) requests to authorize within port movements of cargo.
- Determination of the most favorable duty treatments.
- Determination and verification of country of origin.
- Import classification of goods on the national Harmonized Schedule level.
- Import valuation of goods.
- Required import licenses and permits.
- Required import documents.
- Manipulation and manufacturing permits (CF216 in US).
- Warehouse lots management.
- Electronic warehouse admissions (CF214 in US).
- Filing import declarations to Customs and participating Governmental agencies using a National electronic system.
- Duty drawback calculations and reporting.
- Reconciliation calculations and reporting.
- Calculation of additional taxes and duties, such as antidumping (ADD) and countervailing (CVD) duties.
- Verification of quotas.
- Storage and retrieval of compliance documents.
- FTZ data mining and reporting.
GTM Blockchain Flexibility
There are four major GTM participants – compliance specialists, freight forwarders, customhouse brokers, and FTZ operators. Being ultimately responsible for all compliance decisions, many exporters and importers exercise full control of GTM-related functions in-house, effectively acting as one or more of major participants.
The solution makes possible to configure a hierarchical structure of a standalone GTM blockchain to specific needs of any GTM participants who drives the process. Any combination of GTM childchains is possible. As an example:
- Compliance Specialists – may host only a Governmental and Trade Compliance childchain and outsource all other childchains.
- Freight Forwarders – may host only a Logistics and Freight Forwarding and a Governmental and Trade Compliance
- Customhouse Brokers – must host both an Import and Export Customs Clearance and a Governmental and Trade Compliance
- FTZ operators – must host three childchains: a FTZ and Bonded WMS, an Import and Export Customs Clearance, and a Governmental and Trade Compliance
Execution of GTM smart contracts is not affected, only nodes requesting services shall vary, and federated consortiums and federated consensuses may differ.
GTM Childchain Interactions
Inter-communications between childchains allows for inter-sourcing of smart contracts and sharing results with the parent blockchain. It is integral to the GTM sidechain. Charts of GTM processes show how each procedure depends on data derived from multiple data sources.
Sharing smart contracts and data among the blockchains can be utilized using standard facilities provided by blockchain vendors and by using specifically developed web-services, and most blockchain vendors already have built in currency exchanges.
A single hierarchical GTM blockchain can service any number of supply chains as each request is localized in the dedicated childchain and consumes resources limited to a specific function.
The immutable ledger ensures that records can’t be duplicated, manipulated or faked. The supply chain’s increased compliance visibility promotes an unprecedented level of trust. Data extracted from compliance activity would be cryptographically recorded in blockchain ledgers run by a consortium of companies limited to only those that depend on GTM information.
The system also provides the option to utilize unique and all-inclusive products definitions as the additional efficient link between any of the various system components and objects within the individual components. This feature alone saves considerable financial resources and time during order processing and cross-border movements.
The described approach allows for complex distributed GTM blockchain systems. 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, including sourcing, deliveries, and 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.
