In recent years, blockchain-based use cases have found significant traction within the freight industry. Blockchain’s ability to decentralize information and store it in an immutable ledger accessible by every stakeholder in the value chain can drive industry-wide collaboration and increase supply chain efficiency.
The customs department of Saudi Arabia is the latest entrant to the blockchain space, as it successfully piloted its first shipment through TradeLens, a blockchain-based platform developed collaboratively by Maersk and IBM. The shipment departed from the Saudi Arabian port of Damman, setting sail onboard the Maersk Sebarok, and reached the port of Rotterdam, from where it was put on a truck en route to its final destination in Belgium.
The relevance of blockchain within international supply chains cannot be stressed enough, because the technology can offer some respite to an industry that traditionally suffers from operational inefficiencies and lack of visibility in cargo movement. Cross-border trade requires shippers and carriers to submit paper documents for customs clearance – a process that takes days or sometimes weeks, based on complexity and load specifications.
The paperwork needed to clear import or export goods is exhaustive, leading to businesses scrambling for permits, licenses and declaration statements that need to be submitted to the customs office for their cargo to be cleared. The problem with this process is that the departments that authorize these documents and the ones that verify them work in silos, leading to redundant authentication.
The pilot circumvented this issue by making sure the customer uploaded the commercial invoice and packing list to the TradeLens platform in a structured format, with the export customs broker using the data to submit an export declaration to Saudi customs. Having the shipment information on a verified medium like TradeLens allowed the Saudi customs to access the declaration and register the shipment for clearance.
Digitalizing documents and putting them on a decentralized ledger like blockchain will substantially lessen the steps required to push cargo across borders, because it reduces the need for excessive scrutiny at customs as they have greater visibility into the cargo’s provenance and its movement further on.
“The shipment was monitored in the TradeLens platform for key shipment events and document milestones. Using blockchain-backed structured documentation, data from the shipment’s documents were analyzed by both the export and import customs authorities and the cargo owners via the platform,” said Saudi customs in a statement.
Though the pilot shipment is recent news, the Saudi customs connection to TradeLens materialized at the end of 2018, with the department integrating its electronic data interchange (EDI) system FASAH with TradeLens. FASAH’s objective is to enable seamless data exchange between Saudi customs and exporters and importers.
“To establish the Kingdom as one of the world’s premier logistics hub we needed to create a paradigm shift in the way we handle our shipping processes and explore futuristic approaches with our peer-to-peer business ecosystem worldwide,” said Ahmed Al-Hakbani, Governor of Saudi Customs. “We hope our pilot program will stand the test of time to include other ports as well, and not just the route of exporting, but importing also. We chose to embark on this tech journey knowing that change is uncomfortable, but it is inevitable to be a leading global player.”