blockchain

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 Replacing the unreliable and outdated information exchanges, the platform transparent collaboration across the shipping supply chain ecosystem.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.

Why Is There So Much Hustle Around Blockchain?

Blockchain is a technology created as a modern XXI century alternative to the transactional market reality. The increased risk of fraud and extortion has pushed the IT community to develop a secure transaction system. It turned out to be a business disruption from different points of view.

The beginning of blockchain popularity was directly related to Bitcoin – the virtual currency. However, it soon became apparent that blockchain has many more applications and can serve as an effective security shield for any business transactions, including transactions related to online freight.

 

How does the Blockchain work (in very simple words)

 

Let’s take a look at a very simple example:

Imagine that you have a shared drive with your colleagues in the office. You just saved an Excel spreadsheet with the list of your company’s transactions there and shared access with your colleagues. 

Your colleagues now can open & review the file you’ve shared. They are also free to add new information, but they can’t make any changes to the data which is already there. The result is that the information is open and shared with the group of authorized peers, but at the same time, it is also protected from any manipulation. This is how the blockchain works, in short.

 

Why is it called Blockchain?

 

The technology is called ‘Blockchain’ because it consists of a chain of blocks. Each block represents a piece of data. Blocks are connected in chronological order and are linked to each other.

 

How does the Blockchain really work?

 

There are a few things you should know about the Blockchain:

  • No data manipulation is possible

There is no central authority to control or manipulate the data. This allows for data exchange to be made directly with third parties.

  • The data is crypto-safe

Cryptography is used for the security services

  • Deleting the data is not possible

Once the block is added, it’s there forever – again, no manipulation possible.

  • Consensus

All the parties involved have to validate the data in the block. No one is in control means that everyone is in control.

In the next post, we will cover the possibilities for blockchain application in logistics software and sales automation tools

Stay tuned!

The Future of Technology in Freight Forwarding

The progress in technology development doesn’t stand still, constantly improving user experience in every field – no exception for the freight forwarding industry.

Everyone is talking about the application of digital technologies in logistics which has to revolutionize the business, and many industry players are getting lost in the amount of information on the subject.

At the same time, nobody wants to miss out on the next ‘UBER’ that will disrupt the traditional industry with the brand-new business idea based on the brand-new modern technology.

We have prepared an overview of the ‘hyped’ technologies, using simple words. Below you will find the list of the hottest trends when it comes to the future in the logistics industry.

 

The Blockchain in Freight Forwarding

 

Blockchain became the buzzword in the freight forwarding industry in 2018, when Maersk Line signed the contract with IBM and started working on developing the common platform for the world’s supply chain called the TradeLens. 

Since the start, more and more players who represent different supply chain sectors have been joining the initiative, making it the largest collaborative project in the industry since Inttra. However, some big companies are concerned about Maersk sitting on the main chair and enforcing the rules on everyone else and are naturally hesitant to share their data with the competitor.

You can read more about the blockchain and its applications in logistics in our articles.

 

SaaS and Cloud Technology

 

Cloud Computing is about placing and storing your data in a virtual space, a.k.a. a cloud. This technology is very popular among private users. Think of Dropbox or iCloud on your iPhone. In the business world, companies were required to buy, build, and maintain their IT infrastructures despite the exponential costs. Until the SaaS. 

SaaS (Software as a Service) has a lot to offer to the business. If it’s used properly, it can help save money, time, and human resources. But what about data safety? Usually, SaaS companies use Cloud platforms from large service providers, such as Google, Amazon, Microsoft, etc. making it the safest possible storage space.

You can read more about SaaS (Software as a Service) and Cloud Technology in our articles.

 

The Artificial Intelligence (AI) and the Internet of Things (IoT)

 

Over the past several years, the logistics industry has started to invest in Artificial Intelligence solutions. The AI includes intelligent transport & route planning, supply & demand planning, sales automation tools — but this is only just the beginning. 

Internet of Things (IoT) means connecting to the Internet any item equipped with sensors and communicators, with the ability to control it automatically and remotely.

From last-mile delivery robots and smart ports, to warehouse automated systems and business optimization software, AI and IoT are already making a difference in logistics. In addition, 5G opens up fundamentally new possibilities, including broadcasting data at a speed of 20 GB/s.

Shippers, carriers, suppliers, and consumers can all expect to benefit from these logistics technology trends in the 2020s.

We have prepared a number of articles about the future of technology in freight forwarding. We will cover the hottest trends and their potential application to logistics and freight rate management.

Stay tuned!