A collaborative perspective from FlowBridge and Zodia Markets

Every year, global trade loses over $30 billion to demurrage fees – penalty charges for delayed cargo operations. These costs aren’t driven solely by operational delays but are often a direct result of slow, inefficient payment processes. Traditional international payments can take days to clear, leaving shipping companies exposed to accumulating demurrage charges while funds are in transit.

These charges, typically accruing when cargo remains at port longer than contracted, can reach $20,000–$80,000+ per day for large vessels. A single Very Large Crude Carrier (VLCC) delayed for 19 days at major ports like Rotterdam or Houston can incur $1.2 million in fees. For large oil companies managing 150+ voyages each year, that equates to $80 million in unnecessary costs, losses that could be substantially reduced through faster on-chain settlement using stablecoins.

The core challenge: payment friction in global trade

At the heart of demurrage inefficiency lies payment friction. Today’s cross-border transactions are slow, expensive and fragmented:

• Cross-border payments tied to demurrage typically take 3-5 business days.
• Multiple correspondent banks and currencies complicate settlements.
• Banking hours, holidays and compliance checks add further delay.

During that time, vessels sit idle, costs compound and working capital is trapped in transit. The result is a system optimised for inertia rather than efficiency.

How do stablecoins add value?

Blockchain technology, specifically stablecoins, enable near-instant 24/7 settlement without intermediary banks. When combined with smart contract automation and IoT-enabled verification, payments that once took a week can occur in minutes.

1. Faster payment processing

Stablecoins settle in near real-time, allowing shippers to pay demurrage fees almost instantly. An oil major operating 150 VLCC voyages per year could save millions simply by cutting payment processing times by three days.

2. Reduced banking friction

Stablecoins bypass correspondent networks and operate across borders without cut-off times. A Singapore-based commodity trader avoided up to $500,000 annually in demurrage fines by settling via stablecoins between Europe and the Middle East.

3. Smart contract automation

Smart contracts can automatically release payments once cargo operations are verified.
A bulk shipping pilot linked digital proofs of delivery to instant stablecoin payments, cutting administrative overhead by 30% and disputes by 40%.

4. Transparent dispute resolution

Blockchain’s immutable record of timestamps and transactions provides instant auditability. A European logistics platform saw demurrage disputes drop from 20 per month to fewer than five, saving significant legal and operational cost.

5. Multi-party escrow solutions

Smart contract escrow ensures funds are held securely and released automatically once predefined conditions are met. A UAE port authority introduced stablecoin-based escrows for demurrage, improving trust and accelerating cargo clearance.

6. Lower transaction costs

Stablecoin transfers cost a fraction of traditional wire fees. A mid-sized shipping firm reduced international payment costs by $150,000 per year by moving demurrage payments on-chain. When implemented holistically, these capabilities can cut port dwell times by up to 85% and virtually eliminate demurrage charges tied to payment delay.

How stablecoins and smart contracts are powering the next generation of trade finance

The power of blockchain extends beyond speed. Tokenisation and smart contract automation are transforming the mechanics of global commerce:

• Delivery versus payment can trigger automatically when AIS tracking confirms vessel arrival.
• IoT sensors verify cargo quantity and quality in real time.
• Digital documentation replaces manual paperwork, ensuring instant data integrity.
  

The result is a future where both the commodity and the payment exist on the same digital infrastructure, enabling programmable, friction-free finance.

Which regions enable blockchain and stablecoin adoption in trade finance?

The adoption of stablecoins for demurrage payments operates within a rapidly evolving regulatory environment that varies significantly across jurisdictions. However, several key developments are creating a more favourable landscape for digital asset integration in trade finance:

United Kingdom: The Electronic Trade Documents Act 2023 represents a fundamental shift in how digital instruments are recognised legally. This legislation directly enables stablecoin-based demurrage payments by legitimising digital trade documents that can trigger automated payments, providing legal certainty for smart contracts governing demurrage calculations and allowing electronic bills of lading to serve as valid proof of cargo transfer enabling automated payment release.

United Arab Emirates: The UAE’s progressive stance on digital assets directly supports demurrage payment innovation through regulatory approval for commodity-backed stablecoins, which are particularly relevant for oil and gas shipments where demurrage costs are highest. Dubai’s Virtual Asset Regulatory Authority (VARA) framework provides clear guidelines for institutional stablecoin use while free zone regulations facilitate cross-border stablecoin transactions for trade finance.

European Union: The Markets in Crypto-Assets (MiCA) regulation creates a structured framework that benefits demurrage payment systems by establishing clear licensing requirements for stablecoin issuers, increasing institutional confidence. It defines reserve asset requirements that ensure stablecoin stability during large demurrage payment transactions and creates passporting rights across EU member states simplifying multi-jurisdictional shipping operations.

Singapore: The Monetary Authority of Singapore’s (MAS) Payment Services Act provides clear licensing pathways for stablecoin payment service providers handling demurrage transactions, regulatory sandbox programmes that allow shipping companies to pilot stablecoin payment systems and interoperability standards that ensure stablecoin payments can integrate with existing trade finance infrastructure.

Hong Kong: The Hong Kong Monetary Authority’s (HKMA) regulatory framework supports institutional stablecoin custody services essential for large shipping companies, clear guidelines for crypto-to-fiat conversion important for companies transitioning between payment systems and regulatory certainty for smart contract-based escrow arrangements.

Together, these regimes reflect a global shift toward institutional readiness, though regulatory clarity still varies significantly across jurisdictions.

Compliance built in, not bolted on

Modern blockchain networks integrate real-time KYC/AML, automated suspicious activity monitoring, and immutable audit trails, often exceeding traditional banking standards. This ensures that speed and transparency are achieved without compromising regulatory assurance.

Implementation and risk considerations

Despite these advantages, adoption isn’t plug-and-play. Organizations should plan for the following practical considerations:

• Integration: Payment systems, treasury platforms, and logistics software must be configured to support on-chain settlement.

• Training and process change: Operational teams must adapt to new workflows, custody tools, and verification procedures.

• Counterparty risk: Smart contracts automate conditional release of funds but do not replace Letters of Credit or bank guarantees. Counterparty creditworthiness and issuer transparency remain key.

• Liquidity and FX access: Stablecoin settlements still depend on available on/off-ramps, liquidity depth, and multi-currency conversion.

• Stablecoins can complement, not replace, existing trade finance instruments, serving as a faster, programmable layer in the payment process.

Who is already using stablecoins and blockchain in trade finance today?

Institutions are already adopting this model. Trades, FX and cross-border payments are settling on-chain in minutes, not days.

Zodia Markets, backed by Standard Chartered and OSL Group, provides the regulated trading and settlement infrastructure enabling this shift, combining deep liquidity, 70+ digital assets, 20+ fiat currencies and true T+0 settlement.

FlowBridge continues to consult on blockchain-enabled trade finance systems, including UAE-approved commodity-backed stablecoins and tokenised Real-World-Asset (RWA) models that connect traditional and digital markets.

Together, they represent the bridge between established finance and the new on-chain economy.

Conclusion

The convergence of mature blockchain infrastructure, supportive regulation and undeniable economics signals a fundamental re-engineering of world trade. With $30 billion lost each year to demurrage and legacy payment systems adding weeks to every transaction, the case for digital transformation is overwhelming.

Stablecoins won’t eliminate all demurrage costs, port operations and logistics still play a role, but they can significantly reduce costs tied to payment delays and disputes. For shipping and trade finance stakeholders, integrating stablecoins represents a smart, modern approach to unlocking efficiency in global trade.

About the authors

FlowBridge is a consulting firm at the intersection of traditional finance, digital assets, and enterprise technology. The firm has advised on multiple regulated stablecoin initiatives and maintains deep expertise in Real-World-Asset tokenization and commodity-backed digital assets.

Zodia Markets is a digital asset platform re-engineering how institutional capital moves. It offers digital asset trading, foreign exchange and on-chain settlement services for professional clients. Backed from inception by SC Ventures, the innovation arm of Standard Chartered and OSL Group, Asia’s leading digital asset company, the firm bridges traditional FX and digital markets to enable real-time, bank-grade cross-border settlement.