Can you Digitize the Opaque Physical Commodity Trading Industry?

Physical Commodities trading industry, dominated by few and understood by fewer, is like a dense canopy in the amazon. One of the oldest forms of economic activities known to mankind is also one the least transparent, highly complex form of transaction. The players in this industry secure supplies of commodities from end producers, market them across the geographies as well as take care of the supply chain, logistics, financing and risk hedging.

The very nature of the business involves volume and scale, making it dependent on processes. But an industry where a lot of stakeholders and intermediaries are involved, quality of the good and the cost of transaction play a significant role in building the insufficient trust. International commodities trading firms suffer from significant uncertainty on the origin of ordered commodities, dates of shipment, as well as the quality and quantity of goods. If purchasers have doubts about their trading partner’s reliability, they must seek reliable intermediaries. Presently, purchasers approach credible mediators like brokers, private investigators, and arbitrators. Delay in the timely acquisition of the trade finance and even minor documentation error lead to significant increase in costs impacting the bottom line for the businesses.

Digitization of this opaque, complex and capital-intensive process is a challenge faced by the industry for the long. Several solutions occur in the market, but one comprehensive solution for the entire ecosystem seems to be missing.

With the Blockchain Technology changing our world, it’s to be seen how it revolutionizes the Physical Commodity Trading Markets.