How Blockchain Can Revolutionize Ocean Shipping
International trade is a complicated process especially when it comes to sea freight. However, DLT is being implemented in the shipping industry for some time and already seems to revolutionize it. Let’s see how the technology is employed and what benefits it brings.
What are the advantages?
Decentralization brings transparency to ocean freight as the whole data is updated in real time ad is accessible to all supply chain partners.
Another big plus is that with the use of DLT, there is no need in physical paper documents anymore, therefore, the risk of duplication or loss is eliminated. It also makes the whole process more convenient as the ledger is the same for everyone.
Security is another important advantage since data can easily be verified and the fraud or hack risk is reduced.
How is it used?
DLT offers automatization of the whole transportation process. Documents are not exchanged physically but are rather shared and distributed between all different parties working in a period between the order is made and the product is delivered.
What problems does it solve?
Currently, the main existing problems within the traditional shipping industry are the decreased efficiency and high costs. However, DLT helps to solve these difficulties.
First, the process is slow because of high amount of paper documents and time needed to exchange them.
For example, every time cargo is received for shipping, shippers have to provide the special document called the bill of lading. The document states the origin of the container, what is inside, who picks it up and all other details. If there are thousands of containers, the amount of paperwork is huge. Here, DLT helps to automatically confirm each process, and documents can instantly be accessed by all parties.
Second, by making the process less complicated, shippers’ cost can be lowered as well.
Are there real-life examples?
• DLT for insurance
Gigantic shipping company Maersk was the first to use the blockchain-based marine insurance. For this aim, the organization partnered with Microsoft, EY and Blockchain Guardtime startup.
The platform was launched in May 2018, and Microsoft Azure helped with providing the technology. DLT will manage risk for over thousand vessels and will support over 500 000 transactions during the first year.
Then, Maersk plans to use DLT in applications with insurance companies MS Amlin and XL Catlin.
• Trial shipping from USA to China
In 2016, Commonwealth Bank of Australia, Wells Fargo and Brighann Cotton have decided to conduct a logistical and judicial experiment. Organizations partnered to complete a shipping of 88 cotton bales for $35 000 from USA to Chine using DLT, IoT and smart contracts.
Smart contracts helped to make the paying process easy and convenient, as the guaranteed payment could be made if all the agreed conditions are fulfilled. Also, the transportation was followed through the GPS navigation and special sensors provided information about the products’ conditions.
• Bill of Lading with DLT
In 2017, ZIM, a container shipping company from Israel, has reached a success with document exchange for paperless bills of lading. For the process, the blockchain-based software from Wave was used.
Direct exchange of files was ensured through the Wave’s application, which helped each party to be able to issue, transfer and manage documents.
Source: © Blockchain & Bitcoin Malta