As the COVID-19 pandemic brings major economies to their heel under lockdown, there is mounting concern that the global trade and supply chain system could buckle within weeks.
Collapsed supply and demand, transport frictions, labor shortages and, in some cases, early signs of protectionism, are making it increasingly tough for suppliers to keep goods and services flowing across global value chains.
While the depth of the crisis may be unprecedented, the authors of an April 6 report for the World Economic Forum argue that blockchain technology is key to mitigating the impact of such disruptions.
Ziyang Fan, head of digital trade at the WEF, and Rebecca Liao, co-founder and executive vice president of blockchain project SKUChain, claim the technology can provide the supply chain visibility that is critical, both during times of normal production and of crisis.
Why blockchain is crucial
Until now, the authors claim, many global firms have held back from digitizing the paper-based processes that are ubiquitous in trade, due to concerns that the costs of digitization do not justify the benefits.
Logistics networks thus remain heavily reliant on physical signatures and paper print-outs, which require personnel to be present in-person at various sites to keep operations running. One example is the “Bill of Lading,” a detailed list of a ship’s cargo, where a paper copy is still required by law.
These paper-based operations both reduce visibility and multiply risks at times of disruption, reducing firms’ ability to react quickly to changing circumstances. Already, governments and firms with strong digital infrastructure — such as e-signatures and e-transactions support — are weathering the current storm significantly better than those without, the authors claim.
The resistance to going digital is not only attributable to costs, however. Companies are ostensibly concerned that visibility without robust data privacy will compromise their commercial advantage….