How DeFi is Delivering Key Supplies During COVID19

Centrifuge, ConsolFreight & BioBx deliver PPE equipment to one of the largest school districts in the USA

Since the financial crash in 2008, limitations for Small and Medium Enterprises (SMEs), which represent around 90% of global businesses, were prevalent. When the pandemic brought the world to a halt, these financing problems have been amplified, and the already frail supply chains became even weaker and needed to overcome new challenges. Personal Protective Equipment (PPE) supplies became scarce and more necessary than ever, and to help deliver these, Centrifuge, ConsolFreight and BioBx dealing with supply chains and financial instruments needed to step in.

ConsolFreight, a freight technology provider focused on SMEs & developing countries, partnered up with Centrifuge to decentralize their supply chain using Tinlake, a decentralised application that allows Asset Originators to bridge real-world assets into DeFi and access bankless liquidity, and in return investors can earn attractive yields on a diverse range of tokenized real-world assets.

This partnership enabled them to deliver much needed goods to schools in the largest school districts in the USA for their client BioBX, a distribution gateway for medical supplies that is pulling all its resources together for the fight against Covid. They found it impossible to finance the cargo they wanted to distribute across the country, due to the entire traditional banking system especially reluctant to finance PPE.

Sailing to Their Destiny

ConsolFreight decided to technologize the entire supply chain, and give companies the trust they need when shipping their cargo. Centrifuge’s infrastructure was a natural fit for the solutions ConsolFreight needed. Together with MakerDAO, in 2019, the two companies set up a feasibility pilot and after the success of this trial, the collaboration between Centrifuge and ConsolFreight continued and they launched their first financing pool on Tinlake, with their second pool launching in March 2020. Their rigorous due diligence enabled through their freight forwarding network, and many local partners allowed them to assess and underwrite deals thoroughly and coupling this with the DeFi liquidity available through Tinlake, enabled fast, flexible and borderless financing.

Strengthening the Frail Global Supply Chain

SMEs have historically faced financial issues, especially in the freight-forwarding industry. Through traditional supply chains and freight forwarding, there is no connection between the physical side of the cargo and the financial side to move it. ConsolFreight manages the supply chain from start to finish.

Another limitation SMEs face is highlighted by Ernesto, Founder of ConsolFreight, “Smaller businesses often have very limited access to loans and other forms of interim financing to cover the cost of goods they plan to buy or sell. Even with a confirmed order for products, many banks won’t provide loans or overdraft protection for these types of transactions. Business owners, both small and large, don’t want their own money tied up in shipments of goods that could take four to six weeks, or more to arrive from an overseas manufacturer.”

Companies that export large amounts of goods can’t necessarily afford to wait until their export products have arrived at some distant destination weeks later before receiving payment. Statistics estimate that over 80 percent of global trade depends on trade financing, which helps goods keep moving even when companies lack cash flow to finance the transactions themselves.

PPE for schools across the USA

The collaboration between the two has enabled companies such as BioBX, to obtain almost $800k of financing, thus being able to ship two containers full of gloves to school districts in California, both of which were running out of supplies during the pandemic. ConsolFreight are enabling these essential deals by offering the complete package — financing their freight forwarders through their Tinlake pool whilst bringing all the due diligence and monitoring the cargo from start to finish.

Empowering businesses financially has always been part of Centrifuge’s DNA, and this is a prime example of how DeFi is in the hands of the Real World. ConsolFreight’s unique approach coupled with Centrifuge’s DeFi liquidity allowed ConsolFreight to respond to the 2020 economic hardship quickly, whilst leaving their credit risk uncompromised.

So far ConsolFreight has financed over $3.4million throughout their four Pools on Tinlake, one of the most recent use cases was also delivering tunnel and mobility infrastructure to developing countries across LATAM.

ConsolFreight will be joining our Community Call today at 6pm CET to tell us more about their journey with Centrifuge, and answer any questions you might have. Additionally if you want to find out how to contribute to making an impact just like they did, check out Tinlake for more info.