Pool Clearing for Coordinated Global Logistics

The congestion in ports began with the pandemic which disrupted the operations of many forwarders and ports alike. Back then, the problem was the lack of containers due to the bottlenecks created by the policies against Covid.

While the pandemic is finished and there are no longer restrictions in transportation, the Ukraine and Gaza wars have created new problems that persist today.

These include the threat from pirates near Yemen, the danger around Iranian airspace, and the inflation in the prices of fuel and other basic commodities.

Also affecting are the exit by companies from China, Russia (including sanctions against it), and other affected countries to relocate elsewhere.

This has created congestion in ports such as in Vietnam, while airfreight remains tight in Korea, Japan, India, Indonesia, Malaysia, Thailand, and the Philippines.

To make sure that shipments are less affected by volatility in prices and geopolitical events, logistics companies try to become very large, integrating their sea, land, and airfreight.

However, this raises their costs beyond what smaller exporters and importers can afford. These smaller companies have to resort to the smaller forwarding companies which might be inconsistent and unreliable. So the small players have a hard time to grow their business.

In the short term, our proposed moneyless system can shore up cash for small businesses by reducing the need for money for local transactions.

In theory, this will help them afford the more expensive cargo rates even during the current wars and inflation.

However, with the wars being prolonged and even made worse by Iran, as well as the threat of more natural disasters from global warming that can affect logistics, even this solution might not be effective.

Solution Pool Claering

To solve this, we propose a modified version of pool clearing, a closed system of world trade, originally put forward by British Economist EF Schumacher.

This system will integrate finance and logstics operations in order to drive more efficiency.

Instead of world trade and logistics being done in US dollars in an unregulated way, each country joins a global pool which mandates them to set up:

• a National Clearing Fund
• a list of logistics providers, importers, and exporters

Each country’s Clearing Fund will be subdivided into different industries, with subdivisions, such as:

• Agriculture (Rice, Cash Crops)
• Fisheries
• Livestock and Dairy
• Manufacturing
• Electronics
• etc.

An importer in Japan will purchase Vietnamese coffee in its yen JPY price by DDP, paying into the Clearing Fund of Japan.

This will send a signal to the Vietnamese Clearing Fund to disburse the necessary VND to faciliate the entire exportation. The fund will go to:

• the exporter
• the logistics providers

Since the Clearing Fund will know all the pending exports to various countries in the pool, it can organize the logistics for those countries more efficienctly.

Each Fund can further coordinate with other Funds in the pool to ensure that the containers will be used either for a return trip or a roundabout trip.

In this way, each trip is optiumized and all logistics resources are used.

During disasters, the same system can be used to re-route logistics in a roundabout way.

This efficiency will reduce costs and will give returns to the investors of the fund.

To fill up the Vietnamese fund, Vietnamese will import Japanese products and pay into their Vietnamese fund, reversing the process.

In cases where a country exports more than it imports, the exporting nation can be asked to buy more of the products of the other nations in the pool.

Conversely, if a country imports more than it exports, the other countries can be asked to buy more of its products.