How to Apply Blockchain Technology in Logistics? TradeLens explained.
In the previous article, we’ve started the topic of Blockchain – what is blockchain technology, how it works, and what are the main benefits. We hear a lot about the blockchain application in the financial industry – everyone knows the digital currency, Bitcoin. Now let’s see how the same technology can be applied to shipping.
What is TradeLens?
Blockchain became the buzzword in the logistics industry in 2018, when Maersk Line and IBM announced the partnership project called TradeLens which was established to build and apply the blockchain to the world’s global supply chain. Over time, the project became actively supported by other organizations, and at the moment there are about 100 players who agreed to participate in building the common industry standards.
Who is part of TradeLens?
The list of TradeLens partners now includes:
- Shipping Lines: Maersk Line, Hamburg Süd, MSC, CMA-CGM, Hapag-Lloyd, ONE and PIL
- Freight forwarders: Agility, CEVA Logistics, DAMCO, etc
- Ports and terminal operators: Singapore, Hong Kong, Rotterdam, Halifax, Bilbao, naturally the global APM Terminals, etc
- Beneficial cargo owners (BCOs)
- Customs authorities in the Netherlands, Saudi Arabia, Singapore, Australia, and Peru
This accounts for approximately 250 marine gateways worldwide. This sounds like a lot, but in reality, is just a small share of the global logistics map.
How does TradeLens work?
The core idea of the TradeLens platform is to promote the efficiency and security of global trade, ensure transparency, and boost innovation across the industry. All of that via blockchain-enabled technology.
Many processes for transporting and trading goods are expensive, in part, due to manual and paper-based processes. Reducing the cost of documentation will ultimately affect the transportation costs, and consequently, reduce the price of the goods that appear on the counter. Replacing the unreliable and outdated information exchanges, the platform transparent collaboration across the shipping supply chain ecosystem.
The main projected benefits of blockchain:
– Data transparency and reliability
– Time-saving on data collection and processing
– Increased safety and security
– Cost reduction (due to the above)
Will TradeLens work?
“Expanding digital collaboration is critical to the evolution of the container shipping industry,” said Martin Gnass, Managing Director of Information Technology at Hapag-Lloyd.
TradeLens was launched to help modernize the world’s supply chain ecosystems. And we believe that the only way to ensure sustainable innovation in shipping is to have ALL industry players to adopt the same technology solution and become inter-connected. Blockchain seems to be the best technology to ensure that. But there is a long way ahead until we see that enough industry players have joined the cause to get the real benefits for the connected global commerce.
Think of it this way: when your container is shipped from Rotterdam to Nairobi, then every single party on the way, including the customs in Mombasa, has to be connected to blockchain to ensure transparency and safety of the shipment.
Also, when we speak about blockchain applications in shipping, we consider the operations and documentation processes.
At this moment, it is not clear if the TradeLens solution will be used in the freight rate management or applied to other commercial processes in shipping – as this is sensitive data that is not openly shared between competitors. Especially, with Maersk Line being at the top of this blockchain pyramid, it is doubtful that this technology will be used as a sales automation tool.