A blockchain-based platform is demonstrating how it can cut down on paperwork and risks such as time delays, but it needs to spread awareness of how businesses can benefit from the savings and efficiencies it can bring
When the digital transformation is discussed, there are certain concepts that always come up. One of these is blockchain, the distributed ledger touted as a solution to many industrial and commercial challenges, with the maritime sector no exception.
There is often scepticism about hi-tech concepts that generate such a buzz, with a fear that such purported universal panaceas may promise much but, in the end, deliver little.
Logistics and freight is an area of the maritime industry that could be revolutionised by blockchain technology. With cargo and freight documents potentially running into hundreds of pages that require physical delivery to a host of entities in multiple locations, digitalisation through implementing blockchain could produce great efficiencies.
In a briefing on blockchain and shipping, London-based law firm Watson Farley & Williams said “The expectation is that blockchain technology will create a platform not anchored down by endless paperwork and complex transactions but instead fully digitalised thus enabling more fluid freight movement and reduced costs and resource waste.”
Boston, Massachusetts-based consultancy Boston Consulting Group (BCG) published a report on the potential impact of blockchain on the transport and logistics industry on 29 January that illustrates that while many executives believe blockchain will cause major changes to the sector, there is reticence to explore how these changes can be leveraged.
88% of executives surveyed by BCG said they thought blockchain would disrupt the industry, with 59% believing this will happen in the next two to five years. However, just 16% of respondents felt they had a clear understanding of blockchain and its implementations, and only 20% said their company ranks blockchain in its top 10 strategic priorities. 60% of the executives said that a lack of co-ordination and the absence of an ecosystem were the main barriers to adoption.
BCG partner and co-author of the report Andrew Schmahl said “By increasing transparency, blockchain can mitigate the mistrust that often exists within the [transport and logistics] industry’s multiparty transactions.
“Yet this same mistrust makes it hard to bring together the industry’s diverse participants into a common blockchain ecosystem.”
“To promote industry-wide adoption, each player needs to see how blockchain can create value by relieving the points of friction in its own operations,” said BCG partner and the report’s co-author, Camille Egloff.
“Then, by working with suppliers, customers, and even competitors, a company can understand and implement solutions that address its specific business needs,” she added.
An example of what this might look like is Maersk and IBM’s blockchain-based supply chain tool TradeLens, which hit the market on 11 December 2018, just four months after it was officially announced in August 2018.
TradeLens is designed to be a neutral, open platform underpinned by blockchain technology that facilitates the efficient, secure exchange of information. It comprises three layers. First is the business network, comprising parties such as shippers, freight forwarders, ports and terminals, carriers, government authorities and customs brokers, that have permission to connect to the platform and provide data. Next is the platform layer, which enables users to take advantage of the data, for example by tracking shipment-related events or sharing documents with partners. Then comes the applications and services layer: TradeLens incorporates a set of documented, open APIs to enable seamless access, for example through supply-chain management software, control towers, transportation management systems, enterprise resource planning systems and terminal operating systems.
At present, more than 100 organisations are involved with TradeLens, including more than 60 network members comprising ocean carriers, inland carriers, 40 ports and terminals and eight customs authorities.
Saudi Customs and IT partner Tabadul has integrated TradeLens with Fasah, Saudi Arabia’s national platform that connects parties involved in cross-border trade, in a blockchain pilot programme.
The governmental authority responsible for the import and export of trade goods and associated services, Saudi Customs is heavily involved with achieving Saudi Arabia’s Vision 2030 goals to diversify the kingdom’s economy and attract investment.
Saudi Customs’ governor Ahmed Alhakbani said “The pilot comes in line with our strategy that aims to facilitate trade and enhance security levels, while working to establish the kingdom as one of the world’s premier logistics hubs.
“The recent pilot to link Fasah to the TradeLens platform clearly illustrates that we are on the right track.”
In Canada, both the Port of Montreal and Canada Border and Services Agency have signed up to TradeLens.
Port of Montreal sees TradeLens as a means of enhancing its business intelligence to better plan and allocate resources based in inbound traffic and upstream visibility.
The port is collaborating with Montreal Gateway Terminals, whose terminals receive Maersk vessels, on the project. Montreal Gateway Terminals will provide data on the movements of Maersk’s vessels and containers, which will be integrated into TradeLens to generate intelligence to increase visibility of cargo movements in the port’s logistics chain.
Maersk Canada president Jack Mahoney said “With TradeLens, the Port of Montreal will be better able to control delivery and operation schedules, provide easier access to clearance and billing documents and bring greater fluidity, efficiency and transparency to international shipping.”
Haifa, Israel-based cargo shipping company ZIM Integrated Shipping Services has announced a landmark in developing its blockchain-based paperless bills-of-lading technology, which enables all parties in a transaction to issue, transfer, endorse and manage documentation through a secure decentralised network.
The first pilot of the project was announced in November 2017, carried out in co-operation with Hong Kong-based logistics technology firm Sparx Logistics and Israel-based blockchain company Wave Ltd. In the initial trial, containers were shipped by Sparx Logistics from China to Canada.
Wave’s chief executive Gadi Ruschin said “Moving to a digital bill of lading would be hugely beneficial in supporting the supply chain in general, through reduced costs, error free documentation and fast transfer of original documents.”
On 14 January, ZIM announced two transactions had taken place in which original bills of lading were transferred to the receiver less than two hours after the vessels to which they related had departed – a significant improvement over the days or even weeks that the process can normally take. One consignment was shipped from Vietnam to the east coast of the US, while another was transported from the Slovenian port of Koper to Haifa. All documentation processes including endorsements and ownership transfers were carried out over the blockchain-based platform.
ZIM chief information officer Eyal Ben-Amram said “Having gained considerable experience with this revolutionary technology, we are now moving forward.
“It’s part of our commitment to maximise digitalisation, and at the same time enhance our customer service levels and nurture customer relations.”
ZIM now plans to roll out the technology across all of its customers in selected trades, with Asia-South Africa and North America-Mediterranean the initial focus during Q1 2019 due to the players involved and diversity of activities.