Everyone is asking, “What is blockchain and what does it mean for me and my business?” The answer is neither simple nor straight forward.
The impact of blockchain is likely to be far-reaching – affecting suppliers, manufacturers and end users. The key is adapting.
Blockchain is a new way to store, share and search for information with applications that interact with the ledger. In essence, it’s a platform for sharing information and a network of trust and value. The network is a chain of computers that all must validate transactions before they can be posted to the ledger. Once transactions are approved and recorded, they cannot, in any way, be altered. Blockchain increases efficiencies and decreases costs because data is available in near real-time, eliminating intermediaries and the need to record transactions in a single ledger.
This technology has the potential to disrupt many industries, including transportation and logistics.
During 2016, the maritime industry suffered from a period of historic shipping rate lows which resulted in significant mergers and acquisitions, as well as shipping lines forming alliances such as 2M+H, the Ocean Alliance. On a global scale, the industry was volatile during 2017, but proved to be leveling out, with 2018 expected to continue in a positive direction.
Blockchain in the Maritime Industry
The use of blockchain technology can benefit the maritime industry by verifying information through a trustworthy source. This improved data could lead to a more transparent chain of custody of goods, and reduce the amount of discrepancies and disputable charges such as demurrage.
A range of companies are already working to make blockchain in the maritime industry a reality. Maersk and IBM have partnered on a maritime blockchain implementation joint venture, while APL, InBev, and Kuehne and Nagel have initiated pilot programs, testing the integration of the technology on specific voyages.
There are a number of obstacles facing the industry, including the overall standardization of the technology. Companies must decide if the applications will be centralized or decentralized. In other words, who is going to govern the process. The industry will also have to grapple with the sheer cost of implementation. While vessel owners are hopefully just starting to feel some financial relief and are on the road to recovery, many business owners may not have the financial capability to fund an unproven capital expenditure of this size.
Smart Contracts are stored within the blockchain, with codes to execute actions under specific circumstances. Transactions surrounding the shipment of freight can be automated using such Smart Contracts, which enforce rules on the transfer of currency and assets.
Improving Visibility and Efficiency
Regardless of fleet size, businesses rely on quality data and how rapidly data can be made actionable. With the evolution of blockchain, transportation companies with be able to use data for freight visibility in real time. Carriers, shippers and brokers will be able to seamlessly and comprehensively follow and account for the movement of goods through the blockchain.
Blockchain can generate automatic scheduling of pick-ups and deliveries by coordinating available vehicles and drivers. This could cut costs and lost time, maximizing delivery efficiency. And, with better access to data, carriers can better forecast and strategically route their vehicles into areas where there is a predicted need. Blockchain can also identify backhaul opportunities, provide visibility to rates and potential capacity along a lane. This all could help companies address the existing shortage of truck drivers and exploit fuel efficiency.
Blockchain technology verification allows transparency of how many boxes are loaded and unloaded on a trailer, syncing with GPS data to reduce the opportunity for theft. It can also eliminate common issues of double brokering and lost paperwork, as well as justifying detention charges with in-vehicle tracking systems that verify route, speed and delays along the way.
Blockchain can also be used to improve safety, by providing alerts for maintenance issues with trailers. Each truck in a fleet would have absolute records of all maintenance performed and any damage suffered. With this knowledge, companies can buy, sell and repair vehicles with full transparency.
In order to stay competitive, companies need to be up to date with blockchain technology and how this evolutionary breakthrough will apply to the way the sector does business. By leveraging these tools for predictive analysis, savvy business owners can spend more time on complex risk areas, analytics and forecasting to gain more strategic value and build success.