NAFEZA, Building Digital Trust

The Most Secure Cost-effective Way To Send Your Document

What You Need To Know About Blockchain Technology To Use The Nafeza Or The Cargox System?
By Mohammed Shalaby
Vice Chairman of Arab Spanish Maritime Company

We are experiencing exciting and inspiring changes around the logistics arena in Egypt.
I see much concern on social media and some negativity about the new one-window
system (Nafeza) and how it will change the importation process. The new covid world is
also pushing logistics into a more electronic document-based world. If you are reading
this, you are likely a foreign exporter to Egypt, or maybe even a local importer, and
curious about why the urgent push to the one window system and how it will all work.
How is Egypt going to implement a paperless system? There are some fundamental
underlying principles of blockchain technology that must be understood so that you can
rest assured that Egypt is on the right track, and actually leading the way.
This article will help you understand and simplify the technology behind the system,
aiming for a more positive perspective.
I’m Mohammed Shalaby, the Vice-Chairman of Arab Spanish Maritime Company,
(arabspanishmaritime.com), located in Alexandria, Egypt. We help simplify the import
and export process for foreign and local clients through our logistics services and our
extensive experience.

What Is Blockchain Technology?
This blockchain technology is so innovative that it can be challenging to see its use in
our lives at the moment. The Egyptian government is taking wonderful steps forward to
use the technology to help us be competitive in the international world of logistics. We

will address what you need to know about blockchain, mainly focusing on the logistics
arena’s application and what the one window system is doing specifically.
Blockchain technology is providing a way to transfer data or documents securely and
safely. When something is recorded on the blockchain, it cannot be changed. Even
more impressive, there is no central entity that is storing this data. It is decentralized,
meaning it is stored among a group of computers using something called cryptography.
Your data or documents are secure and cannot be tampered with. A blockchain is
actually a digital ledger that uses cryptography through the internet and devices to
share, transfer, track, and secure assets and transactions (blocks.)

Let us look at the diagram below to go through how blockchain works.

How Is Egypt Using Blockchain & How You Will Benefit?

For our logistics purposes, it is a very innovative way to transfer the bs/l, invoices, L/C, and other important documents from one party to another, in a matter of seconds and securely. Another beneficial trait of blockchain is that you can even transfer OWNERSHIP of documents electronically!

As you saw in the diagram, the block that your documentation is transferred on is verified by thousands, perhaps millions, of computers distributed throughout the network. The verified block is then added to a chain store in the network, creating a unique record associated with other records, just as the diagram shows.

To alter or forge a single record, the entire chain has to be forged on millions of computers, which is practically impossible!

The Old School Way Of Transferring Important Documents…
Let’s compare how things have traditionally been done to how they will be done soon. Let us use a Bill of Lading as an example.
The traditional general process for a paper B/L is:
⦁ The shipper will get an order from the importer.
⦁ The shipper will book the cargo with a carrier.
⦁ The shipper delivers the cargo to the carrier, along with sending the B/L instructions.
⦁ The carrier issues a B/L to the shipper accordingly.
⦁ The shipper sends the original B/L by courier to the consignee.
⦁ The consignee receives the original B/L.
⦁ The consignee presents the original B/L to the carrier at the destination.
⦁ The carrier releases the cargo to the consignee.

The document transfer process in shipping has pretty much remained the same historically. The way of the express courier was a breeding ground for issues. You have probably experienced some of these pitfalls with this practice. Besides a loss of original documents in transit, there could be late receipt of documentation, and most often just the practical time it takes for documents to be transferred from place to place and party to party for verification and endorsements. This results in demurrage, detention and/or port storage, possible loss or cargo damage due to non-clearance, or abandoned cargo.
I remember one time we issued a B/L for a shipment for a VIP client and sent them the B/L by express courier. Imagine our surprise when they called looking for it. It is a type of catch22. The courier confirmed delivery, but the shipper says they don’t have it. We can’t accuse our client of losing the B/L. Believe it or not, this happens more often than you would think. The loss of this B/L had several consequences:
⦁ A major delay releasing the cargo at POD, since we had to issue a new replacement for the B/L.
⦁ This, in turn, meant unnecessary storage, demurrage, and detention charges at the POD.
⦁ We also had to place a bank guarantee for the shipping line to agree to produce a new B/L, which can be upwards of 200% of the cargo value. Normally, this would be done by the shipper, but for some international clients that could be a long-drawn-out process of approvals. We ended up placing the guarantee to shorten the process.

The Future Of Transferring Important Documents (To Egypt)…

So now let’s look at this technology and how it changes this entire process. The first 3 steps will basically remain the same. Afterward, the digital revolution in logistics will truly begin! From step 4 onwards can all be done on the blockchain.
Instead of manually printing a B/L, making sure the carrier has one, and sending one by a courier to the receiver, along with all the supporting documentation, you can create a “Smart B/L”

You can Create, Transfer, Receive, Process, and Archive confidential, ORIGINAL documents. They are secured by a public, neutral blockchain, which will protect confidentiality and privacy while also being auditable and traceable for a fraction of the cost.

The image below diagrams the workflow between the different parties involved.
The issuer (NVOCC or Shipping Line) issues the Smart B/L. They can then send the original over the blockchain to the exporter, who can send ownership to the importer. The banks, customs, insurance, and logistics freight forwarder at POD can all access the documentation over the blockchain, and finally, the carrier at the destination. Approvals by customs, banks, etc., the transfer can take a matter of seconds.

The time and money saved by the application of blockchain technology in the logistics sector are just now taking off. The timing could not be better as we are entering the second year with COVID-19, which has created a higher demand for a touchless, electronic document transfer system. The safety and reliability of the blockchain are proving its value daily. We should all be very optimistic about the future of logistics in Egypt.
If you have questions about the new Nafeza system or what is required by you to avoid delays in your operations, reach out to us. You can complete the form on our website at www.arabspanishmaritime.com, or simply give us a phone call @ +20-3-481-9060. We will be happy to explain anything and help.