If global supply chains are to gain the full benefit of this technology for managing payments and related data, all parties that play a role in global trade must be involved.
The last two years or so have been like a rollercoaster ride in the land of blockchain. Both existing and new players have been considering and evaluating the opportunities and the downsides of this important technological development.
The blockchain concept originally was developed as an efficient and secure way to manage and register transactions made with cryptocurrencies (for example, Bitcoin). Until now, it has mostly been of interest to individuals and financial institutions. But with its distributed-ledger technology (DLT) and smart contracts, blockchain has great potential to benefit all companies across the global supply chain—not just banks. This article will briefly explain what blockchain is, and then discuss why it is important for all parties involved in global trade transactions to adopt it.
DLT, smart contracts, and digital payments
Blockchain is a new computing infrastructure that emerged to power the Bitcoin digital currency application. In essence, blockchain provides the opportunity to have a connected, secure world with a distributed ledger that centralizes data for the involved parties and the ability to run automated checks and processes (called "smart code" or "smart contracts," depending on the legal implications of the code) that trigger all kinds of events (for example, payments).
The distributed-ledger technology component of blockchain allows each counterparty to have its own copy of the same ledger, similar to the way a Google doc allows multiple parties to view the same information at the same time. The database is built to be immutable, which means there is inherent security. Blockchain also allows for smart contracts to be coded and connected in such a way that the contract automatically executes an event if certain preconditions are met. An example would be a (near) real-time payment when goods are delivered.
Blockchain beyond banks
Banks that deal in trade finance—those that would, for example, give importers or exporters a loan to finance their global trading activities—are viewing blockchain as a technology that can provide these entities with a single view of the trade finance transactions in real time. But what about the other parties involved in trade finance? In addition to traditional banks, non-banking participants (for example, shipping companies, insurers of the goods, and credit-rating agencies, among others) and entities that fulfill the role of importers and/or exporters are all part of the trade finance chain. They already play a role in traditional payment methods, such as the commonly used letter of credit (L/C) described below.
We believe that for a trade finance blockchain to be successful, it requires more than just banks coming together. Instead, it requires a critical mass of organizations to adopt "straight-through processing" (STP), an automated workflow from the point when the loan is requested through to when the goods are received and the payment for the shipment is processed. Participation by non-banking participants is critical to its success. However, each will need an incentive to become part of a blockchain. Let's consider just a few of the potential participants and how they could benefit from involvement in blockchain.
Benefits for importers and exporters
Blockchain enables faster processing of transactions between and within parties. Consider the example of an international letter of credit. (Other trade finance products can benefit from blockchain technology, but this article will focus on the example of L/Cs.) In very simple terms, a letter of credit is a written guarantee by the buyer's or importer's bank (the "issuing bank") to the seller's or exporter's bank (the "advising bank") to pay an agreed amount for the goods when specified conditions, including time limits and the presentation of documents, have been met.
When the importer applies to its bank for a letter of credit, all kinds of checks (for example risk, compliance, and credit) are required before the L/C can be initiated. Once it has been initiated, the importer must then wait for the exporter's bank and, subsequently, the exporter to be informed. When the goods have been shipped, it could take up to five days for both the advising and issuing banks to complete their parts of the transaction; only then can the importer retrieve the documents required for picking up the shipment.
With blockchain, however, smart contracts perform the automated execution of the L/C application steps and checks, issuance and advising processes, document checking, execution of payments, and the registration of all these transactions on the blockchain. All of this can occur outside of business hours. The time required from initiation to payment can therefore be dramatically reduced. For example, because blockchain automates the document checking steps (paperless trade is a prerequisite), the time required from sending the documents to the exporter's bank until document retrieval by the importer—including all settlements and payments, if they are not deferred—can be reduced from as many as 10 days to only one hour.
This, of course, assumes no discrepancies that could still occur, depending on the setup of the blockchain. If there are discrepancies, they will be detected right after the documents are created—much sooner than in traditional processes—and all applicable participants will immediately be aware of them. In addition to the reduced transaction time, other benefits for importers and exporters include reduced bank fees (due to less manual activity on the part of the banks), reduced time for loan approval, and reduced risk of fraud.
Why others should join the blockchain
Blockchain initiatives hold great promise for non-banking participants and other organizations involved in international trade. Let us highlight some of those benefits, what the impact on their existing activities would be, and the possible role they could play in the future.
We'll start with the insurers of transported goods. Data is key for them; they use it, for example, to determine the risk involved in a transaction and the associated pricing of insurance premiums. As a consequence of the blockchain's distributed ledger, all participants involved have insight into all validated trade finance data. This would make a wealth of information available to insurers, allowing them to conduct a deeper analysis and make better decisions around the type of insurance product to be offered and at what premium. In addition, the information would be available in near real time—even while the transaction is still ongoing.
So with blockchain technology, insurers could obtain information much faster and the data would be more accurate, thus helping them to enhance their offerings to clients and reduce their own risk. Furthermore, blockchain technology enables faster processing between and within parties (for example, document checking), which reduces the duration of an insurance policy.
Some of the benefits for insurers are also applicable to credit-rating agencies. For example, if blockchain makes data about importers and exporters more accurate as well as more widely available in near real time, then credit-rating agencies will be able to create more accurate models, thereby enhancing their ability to operate in the trade finance chain. However, because data is stored on the blockchain in a distributed ledger, the method of retrieving data and making it available to clients without conversion would no longer be a unique selling point for the credit-rating agencies. Instead, they will have to focus on their ability not just to retrieve data but also to enrich or convert it to useful information for their clients. In other words, they'll need to rethink their commercial models and consider where they can add value with the new data that becomes available through blockchain.
Currently, credit-rating agencies measure the creditworthiness of individuals and corporations based on historical records related to transactions, financial behavior, and other factors. With blockchain, they could combine proprietary data on the financial history of the individual or entity with the aggregated import/export data now made available on the blockchain. This would create the opportunity to draw insights related to the type and concentration of deals, which customers are seeking what types of deals, what buyers are looking for from their suppliers, and related analytics. Right now this data is is not always or not completely available; with blockchain, it would be available to all intermediaries (on a private, permissioned blockchain if the parties prefer). In short, combining private credit-rating data with the blockchain data could create a powerful revenue stream for credit-rating agencies. This could also take some of the pressure off of shipping and logistics companies to provide this data.
Get ready for the future
In this article we've highlighted how importers and exporters, insurers, and credit-rating agencies could benefit from blockchain technology. They are not the only ones, of course. Blockchain would allow any participant in the value chain—not just those mentioned above, but also shipping companies and related logistics service providers, among others—to share a single view of the financing around a shipment.
In fact, many parties that are interested in exploring the benefits of blockchain have moved in the past year from the "thinking and learning about it" phase to the "experimenting with it" phase. All kinds of questions have come up, such as (to name just a few examples): Who should be involved? What will their role be? How are we going to make money? Not all questions have been answered yet; a lot depends on the role existing parties want to play in the future trade finance chain of activities as well as on the incentives they have to participate in blockchain.
There are challenges to be dealt with, too, such as the need to implement paperless trade, issues of data privacy, and how to get all members of a supply chain to participate. Most of the trade finance-related blockchain pilots today are being run by banks, with limited outside participants. The problem with that approach is that banks will only get their own networks to join, limiting the value when other participants are needed for the redesign and adoption of an existing process and product.
All in all, though, huge opportunities and benefits can be achieved if all parties get involved. So for banks, non-banking participants, and other companies that are considering blockchain, the benefits are clear. Luckily it's not too late to start thinking about their future and how they can join the blockchain revolution.
Business software vendor Cleo has acquired DataTrans Solutions, a cloud-based procurement automation and EDI solutions provider, saying the move enhances Cleo’s supply chain orchestration with new procurement automation capabilities.
According to Chicago-based Cleo, the acquisition comes as companies increasingly look to digitalize their procurement processes, instead of relying on inefficient and expensive manual approaches.
By buying Texas-based DataTrans, Cleo said it will gain an expanded ability to help businesses streamline procurement, optimize working capital, and strengthen supplier relationships. Specifically, by integrating DTS’s procurement automation capabilities, Cleo will be able to provide businesses with solutions including: a supplier EDI & testing portal; web EDI & PDF digitization; and supplier scorecarding & performance tracking.
“Cleo’s vision is to deliver true supply chain orchestration by bridging the gap between planning and execution,” Cleo President and CEO Mahesh Rajasekharan said in a release. “With DTS’s technology embedded into CIC, we’re empowering procurement teams to reduce costs, improve efficiency, and minimize supply chain risks—all through automation.”
And many of them will have a budget to do it, since 51% of supply chain professionals with existing innovation budgets saw an increase earmarked for 2025, suggesting an even greater emphasis on investing in new technologies to meet rising demand, Kenco said in its “2025 Supply Chain Innovation” survey.
One of the biggest targets for innovation spending will artificial intelligence, as supply chain leaders look to use AI to automate time-consuming tasks. The survey showed that 41% are making AI a key part of their innovation strategy, with a third already leveraging it for data visibility, 29% for quality control, and 26% for labor optimization.
Still, lingering concerns around how to effectively and securely implement AI are leading some companies to sidestep the technology altogether. More than a third – 35% – said they’re largely prevented from using AI because of company policy, leaving an opportunity to streamline operations on the table.
“Avoiding AI entirely is no longer an option. Implementing it strategically can give supply chain-focused companies a serious competitive advantage,” Kristi Montgomery, Vice President, Innovation, Research & Development at Kenco, said in a release. “Now’s the time for organizations to explore and experiment with the tech, especially for automating data-heavy operations such as demand planning, shipping, and receiving to optimize your operations and unlock true efficiency.”
Among the survey’s other top findings:
there was essentially three-way tie for which physical automation tools professionals are looking to adopt in the coming year: robotics (43%), sensors and automatic identification (40%), and 3D printing (40%).
professionals tend to select a proven developer for providing supply chain innovation, but many also pick start-ups. Forty-five percent said they work with a mix of new and established developers, compared to 39% who work with established technologies only.
there’s room to grow in partnering with 3PLs for innovation: only 13% said their 3PL identified a need for innovation, and just 8% partnered with a 3PL to bring a technology to life.
Even as a last-minute deal today appeared to delay the tariff on Mexico, that deal is set to last only one month, and tariffs on the other two countries are still set to go into effect at midnight tonight.
Once new U.S. tariffs go into effect, those other countries are widely expected to respond with retaliatory tariffs of their own on U.S. exports, that would reduce demand for U.S. and manufacturing goods. In the context of that unpredictable business landscape, many U.S. business groups have been pressuring the White House to pull back from the new policy.
Here is a sampling of the reaction to the tariff plan by the U.S. business community:
American Association of Port Authorities (AAPA)
“Tariffs are taxes,” AAPA President and CEO Cary Davis said in a release. “Though the port industry supports President Trump’s efforts to combat the flow of illicit drugs, tariffs will slow down our supply chains, tax American businesses, and increase costs for hard-working citizens. Instead, we call on the Administration and Congress to thoughtfully pursue alternatives to achieving these policy goals and exempt items critical to national security from tariffs, including port equipment.”
Retail Industry Leaders Association (RILA)
“We understand the president is working toward an agreement. The leaders of all four nations should come together and work to reach a deal before Feb. 4 because enacting broad-based tariffs will be disruptive to the U.S. economy,” Michael Hanson, RILA’s Senior Executive Vice President of Public Affairs, said in a release. “The American people are counting on President Trump to grow the U.S. economy and lower inflation, and broad-based tariffs will put that at risk.”
National Association of Manufacturers (NAM)
“Manufacturers understand the need to deal with any sort of crisis that involves illicit drugs crossing our border, and we hope the three countries can come together quickly to confront this challenge,” NAM President and CEO Jay Timmons said in a release. “However, with essential tax reforms left on the cutting room floor by the last Congress and the Biden administration, manufacturers are already facing mounting cost pressures. A 25% tariff on Canada and Mexico threatens to upend the very supply chains that have made U.S. manufacturing more competitive globally. The ripple effects will be severe, particularly for small and medium-sized manufacturers that lack the flexibility and capital to rapidly find alternative suppliers or absorb skyrocketing energy costs. These businesses—employing millions of American workers—will face significant disruptions. Ultimately, manufacturers will bear the brunt of these tariffs, undermining our ability to sell our products at a competitive price and putting American jobs at risk.”
American Apparel & Footwear Association (AAFA)
“Widespread tariff actions on Mexico, Canada, and China announced this evening will inject massive costs into our inflation-weary economy while exposing us to a damaging tit-for-tat tariff war that will harm key export markets that U.S. farmers and manufacturers need,” Steve Lamar, AAFA’s president and CEO, said in a release. “We should be forging deeper collaboration with our free trade agreement partners, not taking actions that call into question the very foundation of that partnership."
Healthcare Distribution Alliance (HDA)
“We are concerned that placing tariffs on generic drug products produced outside the U.S. will put additional pressure on an industry that is already experiencing financial distress. Distributors and generic manufacturers and cannot absorb the rising costs of broad tariffs. It is worth noting that distributors operate on low profit margins — 0.3 percent. As a result, the U.S. will likely see new and worsened shortages of important medications and the costs will be passed down to payers and patients, including those in the Medicare and Medicaid programs,” the group said in a statement.
National Retail Federation (NRF)
“We support the Trump administration’s goal of strengthening trade relationships and creating fair and favorable terms for America,” NRF Executive Vice President of Government Relations David French said in a release. “But imposing steep tariffs on three of our closest trading partners is a serious step. We strongly encourage all parties to continue negotiating to find solutions that will strengthen trade relationships and avoid shifting the costs of shared policy failures onto the backs of American families, workers and small businesses.”
In a statement, DCA airport officials said they would open the facility again today for flights after planes were grounded for more than 12 hours. “Reagan National airport will resume flight operations at 11:00am. All airport roads and terminals are open. Some flights have been delayed or cancelled, so passengers are encouraged to check with their airline for specific flight information,” the facility said in a social media post.
An investigation into the cause of the crash is now underway, being led by the National Transportation Safety Board (NTSB) and assisted by the Federal Aviation Administration (FAA). Neither agency had released additional information yet today.
First responders say nearly 70 people may have died in the crash, including all 60 passengers and four crew on the American Airlines flight and three soldiers in the military helicopter after both aircraft appeared to explode upon impact and fall into the Potomac River.
Editor's note:This article was revised on February 3.
GE Vernova today said it plans to invest nearly $600 million in its U.S. factories and facilities over the next two years to support its energy businesses, which make equipment for generating electricity through gas power, grid, nuclear, and onshore wind.
The company was created just nine months ago as a spin-off from its parent corporation, General Electric, with a mission to meet surging global electricity demands. That move created a company with some 18,000 workers across 50 states in the U.S., with 18 U.S. manufacturing facilities and its global headquarters located in Massachusetts. GE Vernova’s technology helps produce approximately 25% of the world’s energy and is currently deployed in more than 140 countries.
The new investments – expected to create approximately 1,500 new U.S. jobs – will help drive U.S. energy affordability, national security, and competitiveness, and enable the American manufacturing footprint needed to support expanding global exports, the company said. They follow more than $167 million in funding in 2024 across a range of GE Vernova sites, helping create more than 1,120 jobs. And following a forecast that worldwide energy needs are on pace to double, GE Vernova is also planning a $9 billion cumulative global capex and R&D investment plan through 2028.
The new investments include:
almost $300 million in support of its Gas Power business and build-out of capacity to make heavy duty gas turbines, for facilities in Greenville, SC, Schenectady, NY, Parsippany, NJ, and Bangor, ME.
nearly $20 million to expand capacity at its Grid Solutions facilities in Charleroi, PA, which manufactures switchgear, and Clearwater, FL, which produces capacitors and instrument transformers.
more than $50 million to enhance safety, quality and productivity at its Wilmington, NC-based GE Hitachi nuclear business and to launch its next generation nuclear fuel design.
nearly $100 million in its manufacturing facilities at U.S. onshore wind factories in Pensacola, FL, Schenectady, NY and Grand Forks, ND, and its remanufacturing facilities in Amarillo, TX.
more than $10 million in its Pittsburgh, PA facility to expand capabilities across its Electrification segment, adding U.S. manufacturing capacity to support the U.S. grid, and demand for solar and energy storage
almost $100 million for its energy innovation research hub, the Advanced Research Center in Niskayuna, NY, to strengthen the center’s electrification and carbon efforts, enable continued recruitment of top-tier talent, and push forward innovative technologies, including $15 million for Generative Artificial Intelligence (AI) work.
“These investments represent our serious commitment and responsibility as the leading energy manufacturer in the United States to help meet America’s and the world’s accelerating energy demand,” Scott Strazik, CEO of GE Vernova, said in a release. “These strategic investments and the jobs they create aim to both help our customers meet the doubling of demand and accelerate American innovation and technology development to boost the country’s energy security and global competitiveness.”