Blockchain Is About to Revolutionize the Shipping Industry

  • Maersk, APL, Hyundai race to build paperless products system
  • Adoption of blockchain could create $1 trillion in trade

Globalization has brought the most advanced trading systems the world has seen, with the greatest, fastest vessels, robot-operated ports plus vast computer databases tracking cargoes. But it all still relies on untold millions of paper documents.

That final throwback to 19th century industry is about to fall. A. P. Moeller-Maersk A/S and other container delivery lines have teamed up with technologies companies to upgrade the world’ s most complex logistics system.

The prize is a revolution within world trade on a scale not really seen since the move to regular containers in the sixties — a change that ushered within the age of globalization. But the undertaking is really as big as the potential upheaval it can cause. To make it work, dozens of delivery lines and thousands of related companies around the world — including manufacturers, banking institutions, insurers, brokers and port specialists — will have to work out a process that can integrate all the new systems on to one vast platform.

Should they be successful, documentation that takes days can eventually be done in minutes, a lot of it without the need for human insight. The cost of moving goods across regions could drop dramatically, adding fresh new impetus to relocate manufacturing or even source materials and goods through overseas.

“ This would be the biggest development in the industry since the containerization, ” stated Rahul Kapoor, an analyst on Bloomberg Intelligence in Singapore. “ It basically brings more visibility and efficiency. The container delivery lines are coming out of their covers and playing catch-up in technologies. ”

The key, such as so many other industries, from essential oil tankers to cryptocurrencies, is blockchain, the electronic ledger system which allows transactions to be verified autonomously. As well as the benefits wouldn’ t be limited to shipping. Improving communications plus border administration using blockchain can generate an additional $1 trillion in global business, according to the World Economic Forum.

APL Ltd., owned by world’ s third-largest container series CMA CGM SA , together with Anheuser-Busch InBev NV, Accenture Plc, a Western european customs organization and other companies mentioned last month that they’ ve tested the blockchain-based platform. South Korea’ ersus Hyundai Retailer Marine Co. kept trial runs last year using a program developed with Samsung SDS Company.

The particular shipping paper trail begins if a cargo owner books space on the ship to move goods. Documents have to be filled in and approved prior to cargo can enter or depart a port. A single shipment may require hundreds pages that need to become physically delivered to dozens of different organizations, banks, customs bureaus and other organizations.

Trail of Flowers

Within 2014, Maersk followed a refrigerated container filled up with roses and avocados from Kenya to the Netherlands. The company found that will almost 30 people and agencies were involved in processing the box upon its journey to Europe. The particular shipment took about 34 times to get from the farm to the suppliers, including 10 days waiting for documents to become processed. One of the critical documents proceeded to go missing, only to be found later among a pile of paper.

“ The paperwork plus processes vital to global industry are also one of its biggest burdens, ” according to Maersk, the world’ h largest container shipping company, that has teamed up with International Business Machines Corp. to enable real-time tracking from the cargo and documents using blockchain. “ The paper trail study that Maersk did uncovered the particular extent of the burden that files and processes inflict on industry and the consequences. ”

That plethora of paper cpus has been one of the reasons shipping has lagged behind other industries in shifting to electronic forms. The variety of various languages, laws and organizations involved with moving cargoes in the past made standardization a slow process.

Instead the industry offers relied on advances in transportation technology and cargo handling to enhance efficiency, with the great Clipper cruising vessels replaced by steamships and after that modern oil-powered leviathans – the biggest ships on the oceans. In the 1850s, it took more than three months to maneuver chests of tea from southern China in order to London. Today, that journey might take about 30 days.

The biggest change came in the sixties, when the industry adopted the standard-size steel boxes in use today, changing the wooden crates, chests plus sacks that stevedores had delivered on the docks for centuries.

With these containers sometimes holding items from different suppliers, and deliver cargoes sometimes ending up with a large number of customers in dozens of countries, the particular transition to a uniform electronic program presents major challenges.

“ Not all stakeholders are looking at implementing the same blockchain solution and systems, ” APL said in response to queries. “ This can pose as a problem if stakeholders are expected to business via a common platform or option. ”

And the shipping lines will also have to persuade the ports and other businesses involved in cargo trading to adopt their particular systems. Maersk said Singapore-based port operator PSA International Pte. and APM Ports, based in The Hague, Netherlands, uses its platform. APL and Accenture said they plan to pilot their particular product by the end of this year. Accenture said it has tested its technologies with other pilot shipments that range between beer to medical supplies.

The cost savings could be noticeable in the companies’ financial statements within about two years, Kapoor of Bloomberg Intelligence said.

“ Shipping needs to stop thinking about alone as this standalone middle sector, ” said K D Adamson, ceo of Futurenautics Group . “ It needs to start thinking about the way the different elements of shipping fit into additional ecosystems. ”