Sea-borne trade is the cornerstone of global markets, amounting to US $12 trillion in 2017, and as this statista report shows, container shipping comprises 60% of the goods moving through the trade lanes. Container shipping involves many stakeholders. Shippers, carriers, forwarders, importers, and customs authorities are just a few key stakeholders. The BoL is the proof of ownership in this industry.
For an industry of this size, it is telling that the stakeholders continue to use paper-based bills of lading. The entire process is time-consuming (paper-based bills of lading take a lot of documentation and processing time), and error-prone (a stakeholder might lose the BoL, or it might get damaged). The reclaiming of goods is a costly process that further delays the process. Add the tremendous environmental cost of using so much paper, and you have a significant pain point in the shipping industry.
The BoL process is overdue for a transformation, but it’s easier said than done. The trail of BoL documentation needs to be available to all stakeholders quickly. Interoperability issues need resolution. We are talking about billions of dollars here, so the process needs to be tamper-proof.
Blockchain appears a clear solution at first, what about the transaction throughput challenges of public blockchains like Bitcoin or Ethereum? Well, at least in this use case, the throughput isn’t an issue. BoL transfers already take between 2 to 10 days in the container shipping industry. If a blockchain container shipping solution reduces it to an hour, that’s a win.
CargoX is using blockchain technology to transform the BoL process, adopting the Ethereum dApp approach. The company has deployed smart contracts on the Ethereum blockchain network, using an ERC20 crypto token called CXO that powers the computation in the dApp. Note that CargoX allows fiat currencies on their dApp as well, so users needn’t be concerned about CXO price volatility.
In the pilot, CargoX had a BoL that involved four parties: an exporter from China, a maritime carrier, a release agent, and finally, the importer from Slovenia. The BoL itself is a smart contract, meaning transferring ownership is quick and automated. The BoL transfer took only 4 minutes, a startling result.
CargoX is collecting important ground-level feedback from their users as part of their pilot. The company conducted its ICO in January where they raised 7,000 Ether. They have launched the live version of their platform at time of writing. The company has consistently delivered ahead of schedule and have published their whitepaper. CargoX plans to reach a level where they can handle up to 300 bills of lading in a day before the year ends. They have already signed up multiple container shipping industry players as their partners.
This blockchain container shipping solution from CargoX isn’t the only attempt to transform the global logistics industry with blockchain. The US logistics giant UPS plans to use the technology to upgrade their global logistics. Government agencies are also waking up to this technology after realizing that it can facilitate legitimate global trade. Ultimately the industry will have its pick of multiple, highly-efficient blockchain powered solutions, and the problems of the present will be a distant memory.