Riding the digital Silk Road

After many trials and tribulations in the tech space, local trade and logistics platform provider vCargo Cloud is ready to capitalise on global trade routes and Blockchain technology.

CAMELS and horses were commonly used to transport goods across the ancient Silk Road, a lucrative network of trade routes that connected both Europe and Asia.

Now, homegrown trade and logistics company vCargo Cloud's CamelONE cloud platform aims to be a digital incarnation.

The platform connects key stakeholders in the global trade and logistics industry, such as government agencies, traders, freight forwarders, warehouses, airlines, shipping lines and financial institutions.

Users can process transactions, exchange documents for trade compliance purposes and source for suitable trading partners all under this single digital platform.

Desmond Tay, co-founder and chief executive of vCargo Cloud, said that while there are many companies that have been doing trade and logistics for decades, there is not much innovation in this complex industry. In that sense, the company believes there are many opportunities for it to grow.

He said: "We are not going to position ourselves as another company selling software. We want to disrupt the industry, by building a platform."

Through the CamelONE platform, vCargo Cloud said that it facilitated about 11 per cent of total trade - both imports and exports - in Singapore last year. According to statistics from the Ministry of Trade and Industry, total trade last year was S$967 billion.

Additionally, the platform is present in 12 different countries, including far-flung countries like Mauritius, Georgia and Kenya.

In terms of revenue, Mr Tay declined to comment. The platform provider is a subsidiary of catalist-listed tech group DeClout.

Building up a strong platform

The roots of vCargo Cloud stem from previous iterations Mr Tay and his partners had started.

One of his earliest companies was BizLabs, founded in 2003, which helped companies and government organisations manage their financial, procurement and inventory processes.

During that time, he said that BizLabs was one of the first few to push for the storage and management of information on the Web - rather than on an application installed on a computer.

But after six years, Mr Tay said that he wanted to focus on a certain domain, because he felt driven to make an impact on an industry.

With a few other partners, he formed Visiflex. The new company focused on both local and foreign e-government projects, some of which were continued from BizLabs. This included revamping the trade network for Mauritius, an island nation off the coast of Africa. This was a project he credited that kick-started vCargo Cloud.

In 2013, Mr Tay and his partners founded vCargo Cloud for the purpose of creating a specialised trade and logistics company, making Visiflex a holding company.

They began building up and deploying their CamelONE cloud platform, which would cover the needs of the various stakeholders in the trade and logistics company.

At the same time, they developed their pay-per-use business model for the platform. In other words, the party that benefits from the transactions pays a cut to the vCargo Cloud when it uses the platform.

Global expansion

Fast forward to 2015, tech group DeClout acquired a 30 per cent stake in the company for S$7 million, followed up by S$15 million for an additional 20 per cent a year later. As such, DeClout became the majority shareholder with 50.01 per cent and vCargo Cloud was made a subsidiary.

While Mr Tay admitted it was not an easy decision, he described the situation akin to a parent marrying off his child, necessary for the company to grow further.

He said that the acquisition helped to accelerate the growth of CamelONE, allowing the platform to move to a more regional level.

On the choice of projects the company subsequently takes, the co-founder said: "Ultimately, we are looking at trade routes that we want to exert a presence. One of the key trade flow is the Belt and Road Initiative (BRI)."

The multi-billion BRI was set up by the Chinese government to promote connectivity and trade among Asia, Europe and Africa. As such, the company looks at ways to deploy their CamelONE platform to countries that lie along the routes of the imitative.

Last year, with the support of the East African Community (EAC), vCargo Cloud launched the centralised Single Customs Territory in Eastern Africa. The CamelONE platform enabled interconnectivity of customs systems and sped up the cargo shipping process among five African countries - Kenya, Tanzania, Uganda, Rwanda and Burundi.

Several months later, the platform was deployed as an Information Exchange Hub in the Central Asian countries of Azerbaijan, Kazakhstan and Georgia, facilitating the flow of transit cargo between Europe and the rest of Asia.

Earlier this year, the platform provider also signed an agreement with the Mauritius Network Services - a client Mr Tay has been working with since BizLabs - to initiate e-freight solutions for the country's trade and logistics industry.

Mr Tay pointed out that one of the strengths of being a Singaporean company comes from the ability to form cross-border connections.

"The Chinese, Indians, Americans and Europeans have been very good at domestic trade, because their market itself is enough. Singapore, being a small country that does not have much domestic demand, inherently we are very good at cross-borders."

"Being cosmopolitan, we have experience and exposure in different countries, regions and cultures," he added.

The company plans to incorporate new and upcoming technologies.

Close to one-third of the staff belongs to the technology team, which researches and evaluates potential technologies - through proofs of concepts - that can add value to their platform.

The remaining staff will then consult partners and customers to understand whether such technologies can be validated under real-world conditions, and make suitable refinements if required.

Embracing blockchain technology

One of these technologies is blockchain. The company plans to launch what they claim to be the world's first blockchain-based electronic certificate of origin. These certificates will be introduced in the second quarter of this year.

Mr Tay believes that there is a strong case for blockchain in the area of logistics, due to its unchangeable properties.

He said: "Applying blockchain technology to certificate of origin makes our solution smart, immutable and distributed. It enables important trade documents to be transacted with minimum exposure to the risk of fraud."

Other than new technological developments, the company hopes to expand its platform to 30 countries. Locally, it is also aiming to facilitate 30 per cent of Singapore's imports and exports by the end of 2019.

A key challenge that Mr Tay has identified will be finding more talent and capital to support the company's future expansion.

DeClout group posted a net loss of S$16.4 million for 2017, a stark reversal from S$7.8 million profit the year before.

On that note, Mr Tay said that vCargo Cloud believes that the group is still very sound and strong fundamentally, and DeClout can continue to provide support to the company.

Looking ahead, he said: "The company itself has a grand vision. We want to digitalise the whole global trade."