Two truths are self-evident in the shipping industry. First, it is massive. Maersk, the largest container shipper, claimed a revenue of US $30.945 billion in 2017. Second, it’s a logistical nightmare. The global supply chain is laden with processes that take a significant amount of time as well as manual intervention. Determining the location of a single container the location of your container requires 10 steps involving five middlemen. Custody changes multiple times along the way and is extremely difficult to track due to an over-reliance on legacy technologies like hand written spreadsheets.
Communication is stuck in the past. Traditional systems can share some of the data using EDI, but this too is an outdated technology, and multiple versions exist depending on geographic region. Companies can’t share data easily in real-time, and they often need to send documents via email or courier. Damage and theft are rampant and accountability close to nil due to the woeful luddism of record keeping.
Fortunately, modernization is on the way. TradeLens, a collaboration between Maersk and IBM is working to digitize the global supply chain through blockchain technology. TradeLens uses smart contracts in its documentation module, enabling the code to execute automatically, and allowing hand offs between shippers to proceed painlessly. The distributed ledger prevents tampering of documents so that once bills of lading and such are uploaded to the chain, unscrupulous characters cannot go back and change them to cover for damaged or stolen goods. Maersk and IBM will run the platform and charge other participants to use it.
The Maersk IBM blockchain platform has already enlisted a number of key partners:
- Over 20 port and terminal operators like PSA Singapore, and International Container Terminal Services Inc.
- Global container carriers like Pacific International Lines (PIL)
- Customs authorities in countries like Netherlands, Singapore, and Australia
- Several customs brokers like Ransa
- Beneficial cargo owners (BCOs) like Torre Blanca and Umit Bisiklet
- Freight forwarders, transportation, and logistics companies like Agility, CEVA Logistics, DAMCO, Kotachi.
At the time of writing, TradeLens counts 94 such partners currently using the platform and the blockchain has already recorded 154 million shipping events. TradeLens is tracking critical data in the container shipping supply chain in its distributed ledger and it’s already simplifying operations. For example, a user needs only one process step and no middlemen to determine the location of their container. Furthermore, the blockchain ensures an end to documentation errors, provided the documents are uploaded in correct form, and a massive decrease in information transition delays. Because smart contracts establish a clear line of custody, if there are instances of theft or damaged goods, it will be possible to track the malfeasance back to those responsible and hold them accountable.
Improving the supply chain is increasingly a key blockchain use case, and it’s not limited to container shipping. For e.g. Walmart is working with IBM to improve their food business supply chain using blockchain. Expect this industry to be the first to embrace the blockchain without reservation.