Using an Ethereum-based platform, a number of banks, commercial entities, and shipping firms have successfully completed the first trade of an agricultural commodity conducted on a blockchain.
ING, Société Générale, ABN AMRO, and several other participants have successfully traded a shipment of soybeans on their Ethereum-based Easy Trading Connect blockchain platform.
On January 22, US-based seller Louis Dreyfus Co sent the cargo to the Shandong Bohi Industry Co in China. Robert Serpollet, the global head of trade operations for Louis Dreyfus, said that the Easy Trading Connect system reduced the amount of time spent processing documents by a factor of five compared to what is typical for a trade of this nature.
The banks involved in the transaction issued and confirmed the letters of credit, and Anthony van Vliet, ING’s global head of trade commodity finance, said that while the platform was originally built to support the trade of oil, it offers to boost efficiency even more in agricultural commerce, a field which is often more complex. Cutting costs “is key as we operate in a business that has high volumes and very low margins,” he explained.
ING and Société Générale jointly developed Easy Trading Connect. The platform governs a process that begins when a buyer drafts up a smart contract, then sends the contract to its own bank, the seller’s bank, and the seller itself for approval. In addition to allowing the shipping agent to submit a digital representation of the bill of lading (a legally binding receipt of cargo shipped by a carrier), the system automatically generates an invoice and verifies that all uploaded documents comply with the original contract. This ultimately saves a significant amount of the banks’ time, as they need only to confirm the results of the automatic checks conducted by Easy Trading Connect.
Russell Marine Group and Blue Water Shipping issued the certificates for this particular trade, and the US Department of Agriculture advised participants on how to include phytosanitary certificates in the transaction.
Van Vliet predicted broad adoption of the technology, saying that, “If not months, then in a year or at max two, I think the world in this space will look quite different.” Looking ahead, Louis Dreyfus CEO Gonzalo Ramírez Martiarena opined that, “The next step is to harness the potential for further development through the adoption of common standards, and welcome a truly new era of digital trade flow management on a global level.”
Adam Reese is a Los Angeles-based writer interested in technology, domestic and international politics, social issues, infrastructure and the arts. Adam is a full-time staff writer for ETHNews and holds value in Ether and BTC.
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