- 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.