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How to Apply Blockchain Technology in Logistics?

In the previous article we’ve started the topic of Blockchain – what is blockchain technology, how it works and what are the main benefits of it. We hear a lot about the blockchain application in 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 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 in?

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. Which sounds like a lot, but in reality is just a small share of the global logistics map. 

How does it work?

The core idea of the TradeLens platform is to promote efficiency and security of the global trade, ensure transparency and boost innovation across the industry. All of that via the 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 Replacing the unreliable and outdated information exchanges, the platform transparent collaboration across the shipping supply chain ecosystem.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 it work?

“Expanding digital collaboration is critical to the evolution of the container shipping industry,” said Martin Gnass, Managing Director 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 application in shipping, we consider operations and documentation process. 

At this moment, it is not clear if TradeLens solution will be used in the freight rate management or applied to other commercial processes in shipping – as this is a sensitive data which 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.