Supply chains are undoubtedly complex, and ports play a vital role in the movement of goods across the globe. Ports, the shipping industry, and other stakeholders in the maritime supply chain ecosystem still work in a paper-intensive environment. It is inherently inefficient due to complex regulations, business practices, and political environments. Despite technological advancements within the maritime industry, much of the day-to-day business remains on paper making it difficult to consistently and accurately track shipments from the time a product leaves the factory to the time it is delivered to the consumer. Estimates suggest getting a container from point A to point B can involve more than 30 different parties, with an average of 200 interactions between them. As ports continue to integrate technology and digital innovation into daily activities, technologies such as blockchain offer considerable benefits to the maritime-port environment.
First, let’s explain what blockchain is and how it works. Blockchain is a type of distributed database system that maintains and records data in a way that allows multiple stakeholders to confidently and securely share access to the same information. Every action is documented and accessible to the parties involved, all in real time. The blockchain process begins by someone requesting a transaction of some sort to be verified. The request is then broadcasted to the other parties involved in the transaction to verify the transaction using algorithms. Once approved, the transaction is added as its own “block” to the existing blockchain that is associated with that code. Everything is organized in chronological order with a timestamp. This process is then repeated as the product goes through its lifecycle. Here is a visual overview of the blockchain process:
Blockchain has the potential to provide a transparent, secure, and accurate way of capturing and sharing data for ports and all stakeholders along the supply chain. The key to blockchain’s value is the technology can be applied to diverse port and shipping applications. This includes tracking of cargo, issuance and validation of certificates, bills of lading, contracting, invoicing, payments, to just name a few. Improved transparency and visibility throughout the entire supply chain can provide better operational monitoring, quicker settlements of transactions, improved detection of counterfeit products, and automated orchestration of the supply chain finance to reduce the need for high working capital. Likewise, the information stored in the blockchains is impossible to delete or edit without leaving traces. Maersk’s Trail of Roses project emphasizes such points. The shipping conglomerate tracked a shipment of roses from farm to retailers and found it took 34 days to reach its destination. Of those 34 days, 10 days were wasted due to important documents gone missing. With blockchain, these documents would have been easily located and processed, and shipping time would have been reduced by a third. By tracking cargo in real time using blockchain technology, shipping companies and ports can plan ahead, speed up ship-terminal-truck connection, and cut costs. They can also use data to make educated predictions to enhance their operations and increase efficiency.
We are seeing an influx of blockchain platforms, ports and terminals adopt this rising technology. For example, Valenciaport, the Port of Montreal, and multiple APM terminals are now connected to Maersk and IBM’s TradeLens solution. TradeLens uses IBM Blockchain technology to build the world’s first blockchain network for the global supply chain. Another example is the Port of Rotterdam working alongside Samsung SDS and ABN AMRO to launch a blockchain pilot project in January 2019. The project involved the multi-modal transport of a container from a factory in Asia to the Netherlands, testing the three companies’ cooperative network and forming the basis for “an open, independent and global platform that operates from the perspective of shippers.” Shippers, shipping lines, freight forwarders, port and terminal operators, inland transportation and customs authorities can interact more efficiently through real-time access to shipping data and shipping documents, including IoT and sensor data ranging from temperature control to container weight.
Some say blockchain is the silver bullet for security and is impenetrable against hackers. Some might disagree and there have been instances of blockchain hackings in the financial industry. Blockchain within the maritime industry is still in its infancy, but we are seeing use cases of added value. While such benefits are moving the industry forward, the chain is only as secure as the weakest link. Ports must implement basic defensive measures to increase their security posture as implementation of blockchain and other smart port technologies become more commonplace.