Transoil International and Solaris Commodities are the latest companies to use blockchain for commodity trading. The two companies used blockchain to settle the trade of 25,000 metric tons of 11.5 percent protein Black Sea wheat that was shipped from the Russian port of Novorossiysk.
S&P Global reported on November 12th that the two companies used a blockchain-based agri-commodities trading and financing platform that was built by Swiss firm Cerealia for the transaction. According to the same report, this is the first time that Black Sea wheat has been traded via blockchain. There is no word yet on how much the cargo was worth, or who settled the financial side of the transaction.
Like many companies in the global supply chain, Transoil and Solaris probably want to take advantage of the efficiencies that blockchain has the potential to create. The global commodities trade is archaic in many ways, and blockchain could be the technology that changes a business that has remained mostly static for centuries.
Blockchain Makes Sense for Commodities
By all accounts, the blockchain-based trading platform that Cerealia created worked well.
S&P Global reproduced this statement from Cerealia in their report, “An independent auditor has reviewed all the important details of the trade from the blockchain and validated the smart contract, digital signatures, signed document and timestamps. (The auditor) also confirmed that data has been encrypted, that no other data has been stored and that all data is up to date.”
Unlike the complex paper-based trade finance system that is still used in most nations today, blockchain provides instant access to all parties that are involved in a shipment. This can help to resolve disputes as they arise, and could simplify tracking throughout the shipping process.
Growing all Over the World
The world’s food logistics network is complex. Countries have the ability to connect across vast distances, but keeping track of cargoes can be difficult.
Commonwealth Bank of Australia (CBA) developed their own blockchain-based tracking that integrates trade finance, which was tested earlier this year. CBA worked with an almond grower in Victoria, Australia, to ship almonds to Hamburg, Germany.
The shipping process involved numerous companies, all of which had real-time access to the location of the almonds as they moves across the planet. CBA integrated and Internet-of-Things (IoT) based tracking system into their blockchain-platform, which makes tracking chain-of-custody much easier.
Real-World Implementation is Here
Walmart is another major company that is moving towards using blockchain on a daily basis.
As one of the largest retailers of food in the USA, Walmart has to keep track of an enormous amount of product. Until now that has been difficult, which is why they are requiring all their leafy green vegetable suppliers to use an IBM-designed blockchain tracking platform.
Instead of having to dive into a paper-based record keeping system that can literally take days to track down where lettuce came from, the new IBM blockchain platform does the same task in a few seconds. Not only that, but it also allows Walmart to locate any other stores that may have the same produce on sale.
There are periodic outbreaks of food poisoning that could be mitigated by the system that Walmart is deploying, which means that leafy green vegetables could be the first of many kinds of food to go on the blockchain.
Making the food distribution system safer and more efficient is a great thing from a business perspective, but saving lives makes blockchain adoption a no-brainer.
Depending on how one wants to measure its age, blockchain is at most a decade old. Realistically the technology is much younger than that, which makes the speed at which it is entering the global marketplace extremely dramatic.
With every new use case that shows the value that blockchain creates, the trust that it needs to create grows. The next few years will be very interesting for blockchain development, and the companies that adopt it early will probably be setting themselves up to take full advantage of an amazing technology that is coming into its own.