Shipping Industry and Blockchain

According to Maersk, the world’s largest container shipping company, “The paperwork and processes vital to global trade are also one of its biggest burdens”.

Shipping goods around the globe requires lots of paperwork. With a variety of languages, laws, procedures and organisations to navigate, standardising procedure and paperwork is a task of enormous proportions. It’s the primary reason that the shipping industry has lagged behind other sectors in adopting electronic forms.

But all that could be set to change with the adoption of blockchain technology. Studies have shown the negative impact and inefficiencies associated with paper processing. Is blockchain the solution?

What is blockchain?

Blockchain has been described as “An incorruptible digital ledger of transactions that can be programmed to record virtually everything of value”. Let’s break that statement down.

Firstly, it’s a “digital ledger”. And not just a single, standalone ledger. Think of it as a spreadsheet that is duplicated thousands of times across a network of computers. The information held on this network exists as a shared — and continually reconciled — database.

Decentralisation is a core principle of blockchain, so the data isn’t stored in any single location, making it accessible and verifiable by anyone on the network. Instead of transferring documents containing information back and forth between parties, they can be viewed in real time by everyone.

The second part to examine is “incorruptible”. Because of the decentralized nature of blockchain, there’s no single centralised version that can be corrupted by a hacker. With identical blocks of information stored across a network, there’s also no single point of failure.

A blockchain network exists in a state of consensus. At set intervals, the system self-audits and reconciles all transactions and data which its groups into blocks. Therefore, one cannot corrupt the system by altering any single unit of information that cannot be reconciled. It would require a huge amount of computing power to override an entire network.

How could it benefit the shipping industry?

Historically, the shipping industry has relied on advances in transport technology – bigger, faster ships – and cargo handling to improve efficiency. The biggest change to the industry came with the adoption of standard-size steel boxes.

By replacing the myriad wooden crates, chests and sacks that had been hauled on docks for centuries, with a single standardised system, the industry was revolutionised. The parallel with paperwork and blockchain is an obvious one.

As well as reducing the number of hours lost to paperwork, blockchain can benefit the industry by bringing about smarter cargo handling too. With a shared database it would be easier for deficit and surplus containers to be matched, allowing for companies to adopt smaller container fleets.

Research indicates that, at any given time, one in five containers worldwide is unaccounted for because of the lack of an overarching system. This also makes it difficult to identify whether containers are empty or loaded, so, often, empty metal boxes are being transported by trucks trains and trucks at great fuel cost for no need. Reducing unnecessary journeys and fuel use has clear benefits to the environment.

Blockchain is a logical step for the shipping industry

For a global industry like shipping, moving towards the decentralisation of blockchain technology seems a logical step. Blockchain could help speed up processes, cut transport times, assist with tracking cargo, reduce fuel costs and make the shipping industry, more efficient.

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