TOKYO -- Momentum is growing to adopt blockchain, the technology underlying such cryptocurrencies as bitcoin, to grease the wheels of international trade as businesses and governments begin to test prototype platforms.
IBM and A.P. Moller-Maersk, the world's largest container shipping company, have partnered on a blockchain trade platform that they hope to bring on the market within the year. U.S. Customs and Border Protection and the Customs Administration of the Netherlands are among the early adopters. Simplifying paperwork could boost world trade volumes by an estimated 15%, a project manager said.
Global trade now entails companies exchanging dozens of documents in a hodgepodge of formats by email and postal mail. Using blockchain to share this data in a unified, standardized format could save much time and effort.
With air transport and short-distance shipping by sea, goods can get held up in customs if they arrive before the paperwork has been exchanged. Blockchain promises to lessen the risk of such delays and to increase security. The ability of all parties to verify transactions can cut down on incorrect orders.
A consortium including global management consultancy Accenture, Singaporean ocean carrier APL and a European customs organization tested a blockchain solution to digitize transport documents. The system slashed data entry requirements when issuing documents such as bills of lading, which include information like ship names and cargo amounts, by up to 80%.
Efforts are also underway to link blockchain systems with existing ones. NTT Data and MUFG Bank successfully connected their blockchain-based system for exchanging invoices and other documents handled by financial institutions to the Singaporean government's trade platform.
The hurdles to widespread adoption of blockchain in trade remain high. Documents like bills of lading are expected to be submitted as hard copies. Individual countries involved in trade would need to approve digitized information as valid, which is no small task. The World Customs Organization is considering a set of universal rules.
The Japanese government remains cautiously on the sidelines. "Japan operates under the thinking that a closed network ensures security," a government source explains.
With blockchain, data lives on many computers in a network. "My guess is that resistance in Japan is due to the fact that it is not clear who has responsibility when trade problems arise," a source said.
The view in the private sector is that blockchain will enter broader use in global trade over the next few years. If Japan is slow to get on board, it may lag behind other countries in smoothing the flow of trade.