As COVID-19 spreads across the world, courier services and the movement of paper documents have slowed. A recent review of the survival of human coronaviruses on surfaces found large variability, ranging from two hours to nine days, writes Colin Stevens.
The survival time depends on a number of factors, including the type of surface, temperature, relative humidity and specific strain of the virus.
With shipping routes and ports disrupted, more countries entering lockdowns and pressure mounting on exporters, logistics networks and banks, there is a strong incentive for businesses who trade internationally to digitize their documents.
The multi-commodity trading business is very complex – there are a number of stakeholders, intermediaries and banks operating together to make deals happen. These deals are massive in value and happen very frequently – it’s high volume business.
In a typical international trade up to 36 documents issued by different parties from different countries are first sent to a producer or trading company, further handled and then sent to banks, all making the spread of the virus worse.
Therefore, parties involved in global trade are having to turn to digital solutions, such as electronic signatures and platforms which offer digitized documents, to ensure their trade finance deals and papers can be virtually inked.
In what is called the ‘Silk Road Countries’- the areas between Europe, Central Asia and China some companies that are using all manual processes and others that are moving into digital – there’s no standardization.
An international organization with the aim of increasing trade amongst members and states is the Silk Road Chamber of International Commerce.
One of its leading members is Ali Amirliravi, the CEO of LGR Global of Switzerland and founder of Silk Road Coin, a cryptocurrency designed to facilitate international cross border trade along the Belt and Road countries.
The latter said:
“The COVID pandemic has highlighted a lot of the problems that currently exist in global supply chains. To begin with, we saw the risks of the so-called “just-in-time” production style and what can happen when companies use supply chains themselves as warehouse facilities. Everyone saw the disruptions and delays in supply of the surgical masks and personal protective gear–the overall lack of transparency in traditional systems was really brought to light.
“We saw the need for high quality data control and documentation – people wanted to know exactly where their products were coming from and which touchpoints exist along the supply chain. And then of course we saw the need for speed – the demand was there, but the traditional supply chains ran into a number of problems in generating and delivering the products on time – especially once the legal and compliance requirements were enforced.
“On the money movement side, we saw increased fees, coin shortages, and bank delays really interfering with critical business operations. In times of crisis, even small inefficiencies can have a huge negative impact – this is true particularly in the commodity trading industry where the transaction size and volume is so large.
“These are all problems that the industry has been aware of for some time now, but the COVID crisis has shown the need for action now so that we can overcome these issues. It’s a critical time for infrastructure upgrades and increased transparency, and while the pandemic has caused a lot of negative effects, a potential positive impact is that it has made clear to the industry that changes do need to be made to optimize processes and improve the overall functioning of international trade, trade finance, and money movement.”
According to Ali Amirliravi, there are some solutions to these problems:
“I think it comes down to integrating new technologies in smart ways. Take my company for example, LGR Global. When it comes to money movement, we are focused on three things: speed, cost and transparency. To address these issues, we are leading with technology and using things like blockchain, digital currencies and general digitization to optimize the existing methodologies.
“It’s quite clear the impact that new technologies can have on things like speed and transparency, but when I say it’s important to integrate the technologies in a smart way that’s important because you always have to keep your customer in mind – the last thing we would want to do is introduce a system that actually confuses our users and makes his or her job more complicated. So on one hand, the solution to these problems is found in new technology, but on the other hand, it’s about creating a user experience that is simple to use and interact with and integrates seamlessly into the existing systems.”
In a global emergency, international trade may slow but it must not stop. Even as COVID-19 reveals the shortcomings of a paper-based trade system, it presents companies such as LGR Crypto Bank an opportunity to modernise the function and nature of trade.
“In the trade finance and money movement industry, that means that new solutions have to be able to plug in directly into existing customer systems,” said Amirliravi. “Using APIs this is all possible. It’s about bridging the gap between traditional finance and fintech, and making sure that the benefits of digitalization are delivered with a seamless user experience.”