Quorum, Codefi, and Diligence Case Study
Covantis Case Study: Modernizing Global Supply Chains with ConsenSys Blockchain Solutions
Covantis Case Study: Modernizing Global Supply Chains with ConsenSys Blockchain Solutions
Blockchain solutions from ConsenSys products Quorum, Codefi, and Diligence enable Covantis to create a global network for the efficient execution of bulk agricultural trade operations.
- International trade operations have not seen major technological innovation since the mass adoption of email 30 years ago. Meanwhile, global supply chain management has become increasingly challenging with the need to track more partners, suppliers and end-points; And post trade execution remains highly complex, with repetitive, manual, costly, and time-consuming operations.
- The Covantis initiative was jointly founded by ADM, Bunge, Cargill, COFCO, Louis Dreyfus Company and Viterra. Its platform is focused on digitizing global trade processes to make them more simple, secure, and efficient. Its goal is to minimize operating risks while increasing market efficiency for the agricultural trading and shipping industry, by working towards the following:
- Reducing paper based processes and the amount of email exchanged between multiple parties
- Providing a trusted single source of information to securely share documents and coordinate high seas logistics from port to port
- Giving multiple parties the ability to share real-time transaction data
- Blockchain solutions from ConsenSys products Quorum, Codefi, and Diligence enable Covantis to create a global network for efficient execution of bulk agricultural trade operations—including notice issuance and visualization, user productivity management and in the near future, documentary instructions and document management.
- The Covantis blockchain platform will allow industry participants to collaborate and seamlessly exchange documents and information. The technology will work toward achieving the following efficiency gains in the future, as estimated by Covantis:
- 60% of execution tasks automated
- 70% increase in transaction speed
- 90% reduction in rekeyed entries
- 80% decrease in error rates and inconsistencies
A global trade system reliant on paper-based processes and manual operations
Over the last decade, global trade leaders have attempted to drive standardization and simplification across the agricultural commodity trading industry with the use of e-BLs and electronic documents, with limited success. Today, industry processes remain complex and inefficient due to:
- Manual processes: Post-trade processes for bulk shipments remain labor-intensive and manual with paperwork couriered around, and often repeatedly re-entered—increasing both operating costs and risks of human error.
- Reliance on email: More than 275 million emails are exchanged annually to process the estimated 11,000 worldwide shipments of grain transported across the oceans. (Source: The IPPC ePhyto Solution, The Food and Agricultural Organization of the United Nations)
- Inefficient data exchange: Paper-based certificates and bills of lading are not easily exchanged among multiple parties. It is costly to replace paper-based certificates if they are misplaced.
Specifically in the context of COVID-19, agricultural commodity supply chains have been disrupted by interruptions to paper document deliveries, and the increasing necessity to work from home. The global pandemic has accelerated the importance of the industry’s digital transformation, necessitating an easier way to electronically exchange documents and data.
The Covantis initiative was created to facilitate post-trade execution: the movement of cargo from port of origin to port of destination after buyers and sellers have agreed on contract terms. The solution aims to simplify coordination between stakeholders and various counterparts across the processes of inventory ownership identification, goods chartering from origin to destination, import regulation compliance, final collection, and everything in between.
In order to overcome barriers to industry-wide adoption, the founders of Covantis recognized the need for (1) adoption of emerging technologies, (2) collaboration with key stakeholders, and (3) the creation of a solution-focused entity to drive the initiative forward.
Covantis marks a first-of-its-kind collaboration between 6 of the industry’s largest agricultural traders working to build a solution for the entire industry. Together, they aimed to simplify global trade by providing a secure, efficient, and collaborative environment in which all stakeholders could seamlessly interact.
“Two years ago, we set out on a journey to transform a system of global trade that had changed very little for the last century... We advanced from identifying this crucial need, to working with industry participants across the supply chain to explore and understand the needs of the market, to building a secure and trusted digital network… We look forward to working with our partners to use this technology to enhance efficiencies and reduce operational risk.”
An innovative blockchain technology platform to modernize global trade operations with greater efficiency, transparency, and traceability
In partnership with ConsenSys, Covantis sought to develop the digital foundations that would improve workflows and preserve documentation integrity and data quality along the value chain.
Building the Covantis Blockchain Stack
Covantis chose to build its platform using blockchain technology in order to enable greater transparency, immutability, and auditability across all transactions—securing information exchange between multiple parties.
After considering several business blockchain options, Covantis opted to build with the Enterprise Ethereum open-source protocol, Quorum, for the following reasons:
- Advanced privacy and permissioning capabilities
- High-performance and scalability for large workloads
- Size and diversity of the Ethereum developer and enterprise communities
- Established governance standards to promote enterprise adoption (Enterprise Ethereum Alliance)
- Cost-effectiveness compared to other vendors
- Open-source framework that prevented vendor lock-in
On top of Quorum, Covantis chose to utilize Codefi Orchestrate to manage the complexities of blockchain transaction management. Yuriy Obriza, Covantis’ Head of Delivery, applauded the flexibility and interoperability enabled by Codefi Orchestrate.
In addition to Quorum and Codefi Orchestrate, Covantis utilized Codefi Workflow, to facilitate document sharing across participants through chat/messaging functionality, and ConsenSys Diligence, to audit and secure its smart contract code.
“ConsenSys is at the forefront of the enterprise blockchain ecosystem, building products that facilitate institutional adoption. ConsenSys does this by enabling faster, easier, and more scalable blockchain integration.”
Modernizing Global Trade Workflows
Diagram 1: Typical global trade and shipping workflow
Diagram 2: Industry transformation with the Covantis platform
Industry Pain Points
- Inefficient manual processes and repetitive paper-based documents necessitate heavy data reconciliation, intensive audits, long processing times, and high operating costs
- A lack of common standards and disjointed coordination between multiple stakeholders results in slow clearance of goods
- Lack of transparency and limited visibility over tracking of goods and settlement of trades reinforces counterparty risks
Key Platform Benefits
- A common trusted platform facilitating the following transformations:
- Digitized documents and automated business processes
- Improved security and reliability of documents and data
- Reduced need for manual data re-entry and review
- Secure and seamless information exchange among platform participants
- Real time visibility of information among platform participants
- Secure and auditable transactions
- Greater visibility across supply-chain movements underpinning transactions, leading to reduced costs and operational risks associated with shipping, storage and wait times
- Standardized data to drive further efficiencies, reducing manual errors, and risks of fraud or data manipulation
- Increased supply chain efficiency, transparency, and traceability, enabling the industry to better serve its customers and consumers.
Diagram 3: Covantis is focused on six international trade processes
Key Platform Features
- Company registry: Customer registry and onboarding
- External vessel registry: Connection to external vessel databases
- Notification and task management: Transaction notifications and task progress tracking
- User and role management: Customer identity and role permissioning managed by Covantis based on contextual supply chain/voyage roles
- Messaging tool: Contextual chat feature connecting customers with other participating legal entities in real-time.
- Document management: Document download, upload, and transmission to participating legal entities.
- Voyage management: A voyage dashboard summarizes all pending actions and presents a visualization of contract execution progress. Users can input voyage details and manage nominations including creation, forwarding, withdrawal, substitutions, and amendments.
User Permissions and Data Confidentiality
While providing increased visibility on the trade execution process, the platform is built on industry best practices. Each Covantis user is only extended permissions related to their role. The platform leverages standard and reliable encryption algorithms to ensure the confidentiality of transactional data as well as the non-repudiation of messages and nominations. Each customer uses a pair of cryptographic keys that unequivocally identifies them and every action that is performed in the system.
Encouraging Industry Adoption
Covantis aimed to build a transformative solution for the entire trading and shipping industry with agriculture commodities as a starting point. To do so, Covantis has onboarded hundreds of users from over 45 legal entities. Covantis will work to enlarge its network of participating companies and onboard more industry players.
“We hope to advance the industry by encouraging collaborative, industry-wide participation. We are working with a multitude of stakeholders to ensure Covantis increases competitiveness, speed of data and information exchange, and reduces operational risks.”
Working together with ConsenSys, Microsoft Azure provided its market-leading cloud solution, compliant with the most demanding security standards, and Cognizant contributed its human-centric design approach to the Covantis platform.
An orchestrated global trade ecosystem with streamlined post-trade execution processes
The Covantis platform went live in February 2021, introducing new levels of ecosystem collaboration and facilitating more efficient exchange of documents and information across the global trade industry.
As of 10 May 2021, after almost three months of production, the platform has achieved the following results:
- Streamlined collaboration between 45 legal entities and 500 users across 16 agri-groups around the world
- 343 voyages created
- 3,850+ messages exchanged
- Increase in “string processing speed”, enabling multiple parties to collaborate in a typical message string
- 528 nominations sent to carry cargo in a specific period
- ~35 million tons of cargo volume executed between all the parties in the “string” (buyers, shippers, sellers) resulting in an overall decrease in cost per voyage due to:
- Decreased counterparty risks
- Enhanced tracking of voyage completion status across participants
- Increased productivity with improved communications
- 99.6% platform availability, which means the platform meets enterprise-level requirements and is available to customers and users working across all time zones
The progress so far demonstrates that the platform is successfully connecting players responsible for moving commodities across the world, and players who have commodity cargo at ports of origin, awaiting export. In this early stage, the platform has successfully begun to replace communications that would traditionally occur over email.
The future of agribusiness: Building supply chain consortiums to execute bulk commodity trade operations
The Covantis platform’s initial scope covered the shipment and execution of bulk commodities such as corn and soybeans from Brazil to any worldwide destination, optimizing export trade execution processes by connecting shippers, traders, and charterers.
Next on the roadmap will be to encourage further adoption of the platform so that more communications that currently occur over phone calls and email, can be digitized, tracked, and incorporated into platform workflows.
Covantis will continue working with ConsenSys to digitize the entire execution process for international agricultural bulk commodities—from appointment of third-party providers, sharing of documentary instructions, and generating drafts and final documents.