SafetyDetectives had an exclusive interview with Bojan Čekrlić, COO of CargoX. Bojan has over 25 years of professional experience in many different industries including gaming (casino and video games), aviation, banking, insurance, healthcare manufacturing, and logistics. He has held various positions from completely hands-on to senior C-levels. He worked on simple as well as relatively complex projects, such as the introduction of a new information system for the Institute for Transfusion Medicine. He has been working with blockchain for several years, most intensively since joining the CargoX team. Together with Patrick Vlačič, he also published an expert article in Il Diritto marittimo on the topic of using an electronic bill of lading on the blockchain.
I’m with Bojan Čekrlić of CargoX, thank you for your time today. Can you talk a little about your journey and your role at CargoX?
I have been in IT for over 25 years and I have been with CargoX since its first year of operation in 2018. I personally oversaw the the CargoX Platform development cycle since in 2019. In that time, we grew from a company of less than 10 employees, to now around 80 employees, including full-time and contract workers.
As the COO of CargoX it is my responsibility to orchestrate operational work. Maturing from a startup to a relevant global service provider in the most intense trade industry, we need to optimise our processes for best efficiency and quality, while driving innovation forward for the whole industry. I personally oversee product management and project teams, where my strong background in digital product development is extremely useful. The more generic tasks of a COO will also include resource allocation and cross-functional collaboration.
What are the main services offered by CargoX?
CargoX’s main focus is the transfer of highly important and/or valuable electronic trade documents. All this with the help of blockchain and distributed systems. This eliminates the need for paper documents and courier services, which was the standard until the emergence of platform such as ours.
We are a one of the few companies in the world and innovator in the field of blockchain document transfer. This is a specific niche that supports the global supply chain, transport & logistics, trade, trade finance, and governmental customs processing. CargoX provides electronic trade document creation and unequivocal, verifiable document possession, ownership and control transfer. In short – documents of title and other most valuable business documents can now be tokenized and transferred via blockchain. This makes it clear who owns the document, and therefore the rights to the cargo in the documents. This is very different and much more functional than just sending documents by email, where such ownership cannot be represented.
For that purpose, we have built the CargoX Platform for Blockchain Data Transfer. It is used by more than 110,000 companies around the world. Registration is free, and it can be used by any company or organisation by simply opening an account.
Besides building, improving and maintaining the platform and its functionalities we also provide other services. For example, consultancy on optimal integration of the platform into the daily operational workflows of our corporate or governmental customers. Some of our work, for example, is focused on expanding the platform to support different trade facilitations workflows of various government agencies across the world
How does the use of the neutral, public Ethereum blockchain contribute to the high-level security of electronic trade documents on your platform?
We use blockchain, and specifically the ERC-721 non-fungible token standard on Ethereum, to tokenize digital assets: documents, datasets, highly sensitive and valuable business information. We also use it to provide possession/control/ownership transfer capability for those assets.
In global trade, we started by establishing the creation and transfer processes for the most important document of title – the bill of lading. The bill of lading is a concept that has been around for almost 500 years, and was used to document the cargo and prove the fulfillment of the cargo transport to the destination. The document is issued by the cargo carrier to the shipper or exporter as proof of cargo loading. The shipper or exporter must then transfer the document by courier services (if the document is on paper) to the cargo recipient at the port of arrival, so that they can present the document to the carrier and receive the cargo into possession.
We have redesigned this slow, expensive, and error-prone process to a completely digital approach, involving blockchain technology to act as the ultimate, immutable, distributed ledger. Such an approach brings numerous electronic benefits, drives down the cost, and drastically reduces the time needed to receive the document and therefore the goods.
We are one of the few — if not the only — providers worldwide to rely on the public blockchain for such service. We believe in complete transparency and verifiability and thus, the only logical solution was to use the public blockchain. Of course, no confidential data is stored on the blockchain. Merely the hash of the document, along with limited metadata. This allows anyone to verify the authenticity and possession of the document, without CargoX’s involvement.
Can you discuss the scalability and flexibility of electronic trade document management platforms to accommodate the diverse needs of different industries?
Our platform is built as a combination of on-chain and off-chain data records. On-chain data represents the most important data – the electronic trade documents. Off-chain data is the data that simply cannot and should not reside on the blockchain – personal and corporate profile data, as well as information needed for optimum platform operation, and the content of the documents and data themselves.
As the platform grew, we faced many challenges with the scalability of blockchain. For example, we started hitting the mempool limit on Ethereum mainnat. To put it in simple terms, this is basically the number of transactions that can “wait” to be written to the blockchain through our account. Another issue was throughput of transactions / speed at which they are written to the blockchain, and lastly, of course, the cost. We have moved to a Layer 2 blockchain booster called Polygon to provide faster turnaround, and a distributed set of third-party servers — called “relayers” — to record transactions on our behalf.
This has proven to be a correct path, and we have not encountered any scaling issues so far. On the other hand, some estimates put the number of electronic bills of lading worldwide to be between 1% and 5%. With commitments from global shipping lines to go fully digital by 2030, we can expect these numbers to rise considerably. We believe that, again, going with the public blockchain was the correct choice, as it’s the only “world database” where scaling will never be an issue.
As far as flexibility goes, the options are wide open here. As the industry adoption is still in the early stages and the markets are still maturing, companies using electronic trade documents are still figuring out what they can do with them, what optimisations they can achieve in their everyday processing, and how to strategically gain advantage by doing it. We are helping companies build new workflow. This can help them capitalise on the highly valid data and information contained within these documents, and build new workflows with the highest level of digital trust.
New wave of technologies, such as the CargoX Platform, is build on complete openness. For example, everything accessible through Platform’s user interface is available via an API call. That’s an inherent feature of the platform. For die-hard users, smart contracts can be called directly as well.
Furthermore, the landscape of data exchanged is transforming as well. We started off with scanned PDFs. This has advanced to “printed PDFs”. Nowadays, we’re seeing an uptick of exchange of structured information, mostly in JSON format. This might be considered pretty standard in other industries. However, logistics is quite traditional and accepts new technologies slowly. That’s why we see standardization in machine-readable formats (which JSON is) as a big win for the whole sector.
How does encryption technology play a crucial role in safeguarding sensitive trade data and protecting against cyber threats?
Our business of trade are secure and confidential document and data. Encryption plays a key role in our effort to provide safeguarding of sensitive trade data and counter cyber threats in global trade. We use symmetric and asymmetric encryption on multiple levels of our platform. Uploaded documents and data are encrypted. Data-in-transit is encrypted. Data-at-rest is encrypted. Etc. We’re also relying on Ethereum public key infrastructure (PKI) to allow users to sign critical actions on the platform. Blockchain keys are used for locking essential information and providing a ledger of digital asset transfer and possession presentation.
Industries with regulatory compliance requirements benefit from encryption in meeting data protection standards. We deliver on that promise – to provide them with the most secure digital asset tokenisation and transfer with a neutral blockchain.
Looking ahead, what trends do you foresee in the electronic trade document management space, and how can businesses prepare for future developments in this area?
Huh, predicting the future is always a challenging task. In my opinion, 2024 is going to be the year of interoperability.
We are seeing the development of several interoperability standards, from global and well known establishments, such as FIATA, DCSA, SWIFT, ICC, and EU Commission, to name a few. At the moment, most of the electronic trade document platforms are standalone, as we have all started off from a different technology, time and space. There have been no standards put in place for document exchange, as there have been from the get-go for email exchange, for example. Of course, the fact that it’s not only data that needs to be exchanged, but control/possession and title as well, complicates things considerably. There are several initiatives in this area, and we are proud to be among the active participants in the interoperability development effort.
As mentioned previously, we expect that “classical documents” (PDFs) will be replaced with structured documents, finally allowing systems to “understand” what is being exchanged and act on it. Thus eliminating retyping, repetitive work, and human errors. All in the interest of improved functionality, transparency, and digital trust in the global trade, finance, and governmental community.
Finally, I expect that documents will be replaced with pieces of data in the long term. “Documents” as a means of transferring content will become outdated and will just become a “view” into the specific dataset. To give you an example: today a booking party fills out a document called “Shipping instructions” which is sent to the carrier. (I’m oversimplifying here a bit, to illustrate a point.) The carrier basically retypes the details from this document into a Bill of lading, adds his own data and sends it back to the booking party. Why do we need the “Shipping instructions” in the first place — wouldn’t it be easier if both parties collaborated on the data required for the Bill of lading, much in the same way as we can now cooperate in Google Docs?
Given all of this, I do expect a major increase in electronic trade document usage in 2024 and the next years, as companies try to optimise processes, reduce errors and work towards environmental sustainability.
One of your main cases where the CargoX Platform is implemented, is the integration in the Egyptian governmental NAFEZA platform for international trade facilitation. How does that work, why is it important, and is it reliable enough?
The Egyptian government has decided to completely digitalise the processing of import cargo documentation at the level of customs processing, which also relates to import tax processing, import cargo security and risk assessment. They have their own in-house single-window platform for governmental national agencies to interact with domestic and international business subjects. They needed a reliable channel for collecting cargo-related documents electronically, to speed up customs procedures, collect more taxes and reduce frauds.
They chose CargoX, together with the CargoX Platform as the blockchain document transfer gateway in 2021. It acts as an integrated channel for secure, immediate and immutable delivery of documents.
The biggest change is in the workflow — where documents used to be provided by importers, this burden has been now shifted to exporters, thus considerably reducing the possibility of lost, altered or misplaced documents. The results are astonishing. The solution is used by more than 32,000 importers, 20,000 exporters, 2200 brokers, 300 agencies for organising cargo transport, and intermediaries of cargo capacities, as well as more than 110,000 foreign exporters (companies from outside of Egypt).
The time for cargo release in port has shortened from 16-29 days to just 3-6 days, and continues to shrink. The solution was established as a national platform and covers 30 ports, airports, dry ports and customs free-trade zones in accordance with international standards and best practices. An integration of operations for 29 state bodies was achieved related to cargo traffic and taxation. And what is most important – their tax revenue collection has grown by 13% in the first year following the implementation.
During the 2 years of operation, there has been no downtime in the process, and approximately 5 million documents have been created, transferred, and processed without any setback.