For now, blockchain technology solutions are mostly limited to internal processes and pilot collaborations, and an industry-wide blockchain system for global shipping (see Figure 1) has yet to emerge. But already, there are signs that these pilot projects and emerging industry consortia will quicky speed blockchain adoption.
In our own work, we recently observed blockchain drive a successful new collaboration between a global technology company and an integrated container logistics company. By creating an end-to-end, digitized, open-source supply chain platform, they have been able to attract other major players, and hope to construct an ecosystem that encompasses shippers, freight forwarders, ocean lines, ports and customs authorities.
Another technology product company has created a track-and-trace product integrating IoT devices to capture shipment details from connected systems, providing visibility to the supply chain lifecycle and helping the company make timely decisions that minimize idle transit times. Similarly, a leading FMCG company now invites its partners to collaborate in its supply chain transparency efforts, tracking their products on the blockchain from the farm all the way through to consumption.
As a trustworthy platform that necessitates collaboration, blockchain is rooted in a partnership model that benefits all stakeholder—customers on both ends of the shipment and all the intermediaries in between. Leading industry players will increasingly collaborate on blockchain pilot projects and form collaborative blockchain consortia. The end result, in all likelihood, will be a comprehensive open blockchain platform that becomes the industry standard and drives mass adoption across the globe. Given the current speed of adoption, it is conceivable to imagine a comprehensive global blockchain for shipping emerging within the next 5-7 years.
In the meantime, shipping companies must begin preparing for the blockchain future by piloting their own blockchain initiatives and building the digital skills that allow them to become early adopters of this transformative technology. In particular, companies can expect blockchain to transform four aspects of the shipping industry:
1. Digitized shipment documents
Documents like freight shipping forms, bills of landing, certificates of origin and shipper export declarations continue to be stored in places like file cabinets, warehouses and local hard drives, resulting in both lost and fraudulent documents. Blockchain, in combination with a distributed file system like an Interplanetary File System (IPFS), will both store shipping documents and prevent them from being altered by any of the ecosystem parties without the authorization of all the others.
2. Real-time consignment and shipment tracking
Blockchain can track shipments in near-real time, ensuring a high level of security while simultaneously making information visible to all parties. As blockchain continues to integrate with IoT solutions, it will enable full-fledged track-and-trace solutions and advanced monitoring of environmental factors like temperature, pressure and humidity, providing alerts in case of any aberrations. This is likely to be one of the earliest “wins” for blockchain technology, and these sorts of blockchain solutions are already being adopted by forward-thinking shippers as they seek competitive advantages in a crowded market.
3. Customs clearance and auditing
Customs clearance continues to involve a trail of paper-based signoffs and financial transactions. Blockchain-enabled smart contracts will dramatically improve these manual and time-intensive processes, decreasing errors and accelerating clearance.
4. Cross-border shipments
Currently, sanity checks for cross-border shipments are a manual process, and the process may take days or even weeks to complete—preventing banks from releasing timely payment and compensation to the relevant parties. With a blockchain-enabled smart contract, a successful manifest check could trigger the automatic release of the shipment, as well as a notification to all concerned parties and the release of payments, making the process both more efficient and more immune to fraud and human error.
Plagued by disconnected players and paper-based processes, the shipping industry is in need of profound digital transformation. Blockchain is positioned as the ideal catalysing technology. Blockchain will benefit all stakeholders in the global shipping ecosystem, adding value in the form of real-time tracking, brand protection, anti-counterfeiting, and process digitization and streamlining. While the dream of a fully connected and autonomous supply chain may seem a long way off, the leading adopters of blockchain technology are already bringing that vision closer and closer to reality, while realizing new levels of efficiency and customer satisfaction.