Logistics and supply chain management solutions provider ConsolFreight is working to increase logistics players’ role in trade finance.
The company said in a press release on Thursday (Oct. 31) that it has launched a proof-of-concept report “Trade Forward,” which outlines its initiative to increase the role of freight forwarders in the supply chain and organizations’ access to trade finance.
ConsolFreight described the concept as a new business model that encourages collaboration between freight forwarders, insurance companies, financial institutions and other third-party logistics players to expand access to trade finance for small and medium-sized businesses and improve oversight of trade asset movement.
In a collaboration with Telefonica and its IoT connectivity platform Kite, as well as the Florida Blockchain Foundation, EoS Dublin using EOSIO blockchain technology, and insurance provider Anova Marine, ConsolFreight is testing expansion of non-traditional trade finance for shipments using the Trade Forward model. The company said it expects to expand its testing from Africa into Latin America with additional partners.
“Banks are short-sighted in determining and validating the value of the goods being financed,” said Ernesto Vila, CEO of ConsolFreight, in a statement. “They have drawn a very distinctive line between logistics and financial institutions, where the value of the assets is entirely disconnected from the process, thus leaving an untapped market of unfulfilled credit demand estimated at $1.6 trillion.”
The PoC was announced at the IoT Solutions World Congress in Barcelona, the company noted.
Trade finance is increasingly relying on collaboration between relevant parties, with many proponents of blockchain noting the technology can support such collaboration and ensure everyone involved has access to the most up-to-date information about a transaction.
The Asian Development Bank published research in September that found access to trade finance is ever more critical in times of economic uncertainty.
“Given the uncertain economic outlook, it is critical that more efficient, stable and sustainable trade finance channels are created to spur global growth and development,” said ADB Trade and Supply Chain Finance Head Steven Beck in a statement last month.