Digital Silk Road - Belt and Road on Blockchain

The FINANCIAL -- The Belt and Road Initiative, is a significant development strategy launched by the Chinese government with the intention of promoting economic co-operation among countries along the proposed Belt and Road routes. 

The ‘Belt and Road’ initiative promises more than US$1 trillion of Chinese investment in some 60 countries. The main aim is socio-economic development through improving the routes for land and sea trade. The initiative will also boost science and technology across the region, for example through research into artificial intelligence, nanotechnology, quantum computing and smart cities. In addition to Chinese investment, there are increased interest from trading and logistics companies to develop its present along the corridors. Consequently, it is important for participant countries to be actively promoting its potential, in order to attract foreign investments and facilitate development.

The fastest way to success is to highlight bottlenecks, challenges, weaknesses and problems along the routes, and convert them through business solutions into opportunities and efficiency.

One of the weaknesses of Trans-Caspian International Transport Route (TITR) that passes through China-Kazakhstan-Caspian sea-Azerbaijan-Georgia-Turkey-EU is that there is no common platform for transportation business arrangement, and no single responsible operator. Bottleneck could be change of gauge or means of transport, printed documents arrangement, and no regular shore to sea freight connection from Georgia to Romania. The main challenges are transparency, online tracking, predictability, online accessibility and booking within transport routes. Congestion and delays at border stations, particularly at stations with a change of gauge. Lengthy procedures for crossing borders. Lack of harmonization in the documents that are required by different countries.

Domestic railway legislation determines the liability of railways, but there is a lack of international components in terms of this liability. At the international level, two legal regimes are in force between Europe and Asia. The regime defined by the Intergovernmental Organization for International Carriage by Rail (OTIF), using the CIM consignment note in Western European countries, and the regime defined by the Organization for Cooperation between Railways (OSJD) in East

European countries, the Caucasus and some Asian countries, using the SMGS consignment note, which is not accepted in Western Europe.

The existence of two different legal regimes causes substantial delays in the movement of trains across borders. Although apparent success was achieved with the adaptation and introduction of the common CIM/SMGS consignment note, more work is still needed to make OTIF and OSJD railway zones more coherent, convergent and interoperable.

The CIM/SMGS consignment note frees the parties involved in transport operations from rewriting carriage documents when crossing the border between states of two different legal frameworks.

Decentralized transport platform based on Blockchain - Distributed Ledger technology, is a solution to present weakness and inefficiencies for no common platform and no single responsible operator availability for transport business in TITR corridor.

Smart contracts integration into the system, for switching agreements between jurisdiction CIM/SMGS, and enable issuance of paperless electronic international transport documents, could be another potential for efficient commercial operations facilitation.

Algorithms integration is vital for system automation, for increasing transparency, and decreasing artificial barriers. Advance system notification for quick customs clearance and border crossing. It is essential to be able to make online tracking, make transport timing predictable and precise, and provide online accessibility with ability to make bookings. Visibility of congestions could enable efficient and fast routing planning.

Latest main messages from UIC Eurasian rail corridor forum: Digitalization and making uniform legal environment for rail transport and transits is highly important. There is no global regulation for railway transport, similar to maritime field covered by IMO (international maritime organization). Single contract is required on Euro-Asian connection. There is CIM/SMGS consignment notes harmonization, despite that, two legal contract for carriage of goods within geographies of SMGS and CIM. While OTIF is developing interoperability concept, new appendix, which is promising.

Under development “New Rail Silk Road Economic Belt’”, railway expert’s estimate, that all the way standard gauge rail line through China-Afghanistan-Iran-Turkey–EU (~9000 km, 10 days) can be most efficient and shortest route, if such is developed.

Cyber attack in 2017 on Maersk caused IT breakdown. In cooperation with IBM it was decided to apply Blockchain, improve global trade and digitize supply chains. Novotrans (railway operator) and Universa Blockchain sign memorandum for digitization of the train cars, transferring their statutes (loading, unloading, location) to blockchain and to include all details and specifics of the train maintenance to the digital history of railway carriages. If all rolling stock processes are transferred to blockchain, it is impossible to fake or change any information about the railway carriage and the goods carried inside. This information can also be accessed by each participant of the network or transaction at any moment.

Georgian startup MARINE APPLICATIONS LTD. focuses on creating web-based, mobile friendly applications for companies acting in marine industry. Company has already developed solutions for online D/A (disbursement account), SoF (statement of facts), Port line-ups, Price-list and Catalogue for suppliers, and has great potential to be present as global marine applications solutions provider.

Chinese Proverb says that when the winds of change blow, some people build walls and others build windmills. Present transport systems and information technologies are still in 20th century, and require shifting to Data Technologies, to be prepared and respond to future requirements. It could be breakthrough if consortium countries for the corridor passing through Georgia, will make difference, create new technological standards ahead of time, and provide success story to the world, for multimodal transport business arrangement.