Joint venture brings AI and blockchain to Chinese ports
October 3, 2018
Fintech and asset digitisation services company Ideanomics has formed a joint venture to use artificial intelligence and blockchain to streamline the supply chain through Asia-Pacific ports.
The venture with Asia-Pacific Model E-port Network (Apmen) aims to create an online port clearance system across Asia-Pacific, starting with two of the biggest ports – Shanghai and Guangdong – which account for nearly half of China's imports and exports.
The total value of import and export goods of Shanghai and Guangdong ports combined is $1.5tn, up 13% on a year ago. The full implementation of connecting e-ports across the region could save up to half of supply financing cost, which is 16 to 25% in China.
Ideanomics, formerly Seven Stars Cloud Group, owns 60% of the joint venture, which plans to list on a Chinese stock exchange before the end of the year.
"We are excited to deliver a never seen before intelligent supply chain management platform driven by blockchain and super artificial intelligence technology," said Bruno Wu, chairman and co-CEO of Ideanomics. “We will integrate business data from various partners, establishing a risk control model in cooperation with a single window to provide risk control services for regulatory authorities and enterprises.”
Apmen's online port clearance system was established in 2014 to promote the development of model e-ports in Apec countries and enhance connectivity among cargo hubs in the region. It has 16 port members including New South Wales in Australia and Vancouver in Canada. Apmen aims to establish an information sharing network and cooperation platform among member ports, to catalyse the international interoperability of single-window systems, and to enhance data transparency and interconnectivity of supply chain in the Asia-Pacific.
"The full implementation of connecting e-ports across the region using the Ideanomics supply chain finance blockchain will save more than just trading costs and time," said Liu Yadong, chairman of Apmen. “By leveraging the expertise of Ideanomics for their best in class intelligent supply chain services and super artificial intelligence technology we are advancing trade facilitation and our supply chain connectivity.”
Yadong will become chairman of the joint venture. Huang Feng, current director general of Apmen, will become the full time CEO of the venture.
With a world record of 40 million TEUs (twenty foot equivalent units of cargo capacity, often used to describe the capacity of container ships and container terminals) handled in 2017, Shanghai says it has cemented its spot as not only the busiest port in China, but also the world.
The joint venture will use artificial intelligence and blockchain related technologies to streamline the e-port and e-custom operations. It will build and install the Ideanomics recommended supply chain finance blockchain to bring banks and financial institutions as lenders and customers together by eliminating layers of middlemen causing unusually high interest rates often exceeding 20% annualised.
The revenue model for the venture is based on percentage of lending volume usually 0.5 to 2%, as well as a risk management platform-as-a-service (PaaS) operation which will base its revenue on lending volume with specifics varying on a case by case, but normally around 0.5%.
It will use blockchain operations to extend connectivity from port to port and custom to custom to include the ultimate buyers and sellers with their warehouses directly connected by blockchain.
The aim is to establish and grow asset-backed securitisation opportunities from the operation by securing high yield assets, which can be offered through Ideanomics' global sales network including traditional and blockchain based methods of securitisation, fractionalisation and tokenisation.