BLOCKCHAIN IN SHIPPING INDUSTRY
Can Blockchain Revolutionize the Shipping Industry? – One of the things that separate us as humans is distance, but this distance is no longer a barrier when it comes to movement. Technological advancement has been able to develop various means of movement even to a farther distance.
Such development did not just favor human movement, it also extends to goods and products for both intra/interstate and countries. I.e thankfully, I as a trader do not necessarily have to travel with my product to the far destinations they are needed. One of these provided means of goods and product delivery is transportation by water basically known as Shipping.
Sadly, with the speedy advancement in technology, affecting almost every sector in the world, the shipping industry is still almost in its primitive era. Lots of things still affect this sector leading to operational inefficiencies.
But it seems the light is ready to shine on the shipping industry with the interference of the revolutionary blockchain technology. Blockchain is an open-source P2P network. Although the initial use of the blockchain was for financial revolution, progressively, its use case is now numerous.
Yes, blockchain can revolutionize the shipping industry in many ways, with its smart contract, blockchain will change the paradigm of the current business model being operated.
BLOCKCHAIN USE CASE IN SHIPPING
Most of the areas that need the blockchain touch are not far fetched. Let’s take a look a 6 main blockchain use cases in the shipping industry.
1. Strong storage
Talk of the shipping industry, you are toiling with an industry with lots of complex and bourgeois paperwork. The model is such that if one of these documents is not provided at each point, the process will not be complete hence causing another procurement process. Export.gov made to realize that for every stage in the shipping transaction process, two or more paper documents are needed even for export purposes only. Documents such as a bill of lading, charter party agreement, certificate of origin, airway bill, and a whole lot more before the carriage and delivery of cargo take place. This document can be bulky such that a strong storage system is needed. Blockchain is a digital recorder which once information is recorded, it cannot be altered. It can help in the processing of these documents accurately, ensuring a lasting safekeeping of them digitally. With the employment of the Ethereum smart contract, it is immutable I.e the paper works records can’t be altered. It will be archived.
2. Middlemen elimination and Cost reduction
An advantage of the blockchain technology is in its offer of low usage and transaction cost. Freight and cargo movement can be really expensive, one of the identified reasons is with the activities of too many middlemen. It can be said that shipping is controlled by freight brokers. This middlemen chain ends up influencing the price which at the end burdens the charges paid by consumers. Blockchain exists to eliminate human activities which automatically reduces price charged thereby making the end-users pay lesser.
Besides, logistics management reported that freight logistics do account for about $1.48 trillion annually by 2015 data. Imagine what last year’s account must have been. Isn’t this sum outrageous for shipping? There is an urgent need to involve blockchain in the industry, it will ease the logistics stress and logistics dollars.
Stephen Kukman realized that the shipping industry spends 5 billion dollars annually on preparing and delivering only bill of lading by courier, however, that prompted him to create a revolutionary Blockchain-based Bill of Lading Service known as CargoX.
3. Immutability and Theft Avoidance
The blockchain immutability is ensured by the application of smart contracts, this means that records can’t be manipulated, altered or tampered with. FBI recorded that cargo theft causes an annual loss of approximately $30 billion per year. The cryptography of blockchain is secured so well. Smart contract are meant to reduce human error, it works by turning contracts agreements into codes, distributing the codes among computer nodes already connected to the network, the nodes then engage in a computational race to hash these codes and the winning node encrypts the codes on the network. This process is all to ensure that the contract is not papered but coded securely against theft or hack. It prevents unscrupulous individuals from having access to the agreement terms and figures. So, immutability ensures that information can’t be corrupted and the smart contract sees that it can’t be hacked or stolen
Another worthy to note problem with transaction processing in shipping is the speed. It’s no gainsaying that getting documents available for the ship carriage and delivery process is long and the transaction process can be annoyingly slow. Thankfully, the blockchain has transaction speed as one of its core advantages, with the proper employment of blockchain, transactions become fast and this will reduce the wait for things to get ready and delivered
5. Trackability, transparency and efficiency
Blockchain Is an open ledger network that is accessible by anyone. With its employment, transaction progress and state are tracked. This will give room for openness and transparency in the industry. Regulatory bodies can effectively monitor companies and cargos. Even economically, the world can have access to the state of things in the industry giving room for checks and balances.
Also, this can help to keep the industry on its feet thereby forcing it to give it’s best. It will ensure maximum efficiency, provide space for healthy competition among the big players and intending ones. Again, it will Foster representation. For instance, if I have some goods I want to send to another country, the blockchain gives me access to view records of cargo companies, where I can select the best that suits me. In other words, it’s a pitching agent where records speak for the companies.
6. Data Sharing
One of the issues with digital world is data, currently, there are various startups that are working towards blockchain data protection and privacy. Blockchain will unify all the activities and performers in the transaction process throughout the entire shipping process. It will then distribute the data in a fair manner to all the parties thereby ensuring equal ownership of data by the parties involved. But, what one can be sure of to an extent is the safety of data against malicious use.
If it’s to talk of a Foster to the growth of international trade and relations development, the shipping activities cannot be left out. Interestingly, shipping companies are beginning to see the benefits of blockchain adoption to the industry. A lot of them have joined Blockchain In Transport Alliance (BITA), an organization that oversees the adoption of blockchain into freight.
Truthfully, blockchain is somewhat complex, there is the need to have the best hands on deck, the need to enlighten and educate all actors of the industry on the concept and its features. A proper adoption and application of blockchain technology will change the paradigm in the industry, maximize output and at the end, revolutionize the shipping industry.