The Practical Application of Blockchain in Maritime Shipments
An orchard owner confirms a shipment of temperature-controlled apples via blockchain. Throughout the voyage, the buyer monitors the container to ensure that the apples have maintained optimal temperatures. The customs certificate is seamlessly transferred between the freight forwarder and port authority. Upon delivery, the buyer tenders his electronic signature to the blockchain, which the owner receives within minutes. This is the future of shipping, and it’s all made possible by blockchain.
What Is Blockchain?
Blockchain is a distributed, digital ledger. A “block” contains information about a transaction such as signatures, time stamps, unique identifiers, and any other data that the transaction seeks to capture. Once a block is added to the blockchain, network computers race to authenticate the block, hoping to reap the reward offered to the first computer to verify the transaction. The block is then sealed, rendering the transaction unchangeable.
Bitcoin brought this technology to the fore. For the first time ever, individuals could engage in digital transactions that are secure, decentralized, publicly verifiable, and immutable.
Blockchain Is Transforming the Maritime Industry
The maritime industry—long plagued by voluminous paper trails, information delays, and disconnects between supply chain participants—has begun to realize blockchain’s potential to reshape transportation management systems. Generating and executing agreements over blockchain allows for more accurate record-keeping, commodity tracking, and fleet management. This in turn enables insurers and insureds to better assess enterprise risks.
In 2017, the World Economic Forum predicted that blockchain would save the global economy billions of dollars. The maritime industry has responded in kind, debuting several blockchain-based innovations in 2018 that are sure to transform the industry:
- The first smart Bill of Lading was issued electronically for a 20-foot (1 TEU) container loaded in China and discharged in Slovenia. The transfer took mere minutes—a dramatic improvement over the typical days or weeks required to transfer a traditional Bill of Lading. All parties to the sales contract were able to monitor the Bill of Lading in real time. Moreover, the risk of loss, damage, or theft was virtually eliminated through the sealed blockchain transaction.
- The first marine insurance blockchain platform was launched. The platform enables insurers, clients, and third parties to access shared ledgers with up-to-date information regarding assets, risks, and parties to insurance contracts. In addition, multi-party insurance transactions will no longer be subject to time-consuming reconciliation.
- A subsidiary of Abu Dhabi Ports launched its own blockchain platform, Silsal, for its trade community in order to address communication gaps between importers and exporters. The resulting platform provides full encryption to all transport documents, as well as a unique digital identity.
Just as the “container revolution” transformed shipping during the 1960s and 1970s, blockchain technology is fundamentally altering how maritime actors approach information sharing. 2019 is sure to see further innovation in transportation management as industry players increasingly leverage blockchain to develop more cost-efficient, transparent, and agile supply chains. What remains to be seen is how rapidly industry players will embrace blockchain as the future of transportation.