What is blockchain?
We use a trusted middleman such as a bank or notary for most transactions. Blockchain removes the need for a third party and allows consumers and suppliers to connect directly. Using cryptography to keep exchanges secure, blockchain provides a decentralized database of transactions that everyone in the network can see. You can think of that as a chain of computers that must all approve a transaction before it can be verified and recorded. The well-known digital currency Bitcoin is a great example for the usage of Blockchain that stores the details of every transaction and stops the same Bitcoin being spent more than once. It can be used for almost every type of transaction involving value and could also help to reduce fraud because every transaction would be recorded and distributed on a public ledger. The World Economic Forums expects the Blockchain to grow significantly in the next years as banks, insurers and tech firms see the technology as a way to speed up settlements and reduce costs.
How do you personally benefit from Blockchain technology?
Innovators across different industries are exploring ways to use Blockchain to transform traditional business models. Many great businesses already benefit from greater transparency, enhanced security, improved traceability, increased efficiency and speed of transactions and reduce costs. But how can you benefit from Blockchain in container shipping and logistics? Corporates like Maersk and Kühne + Nagel but also startups like CargoX and 3000cubits already explore the possibilities of Blockchain in shipping:
The Maersk and IBM joint venture wants to eliminate inefficiencies and the dependency on complex paper-based systems using Blockchain technology. Tradelens brings all parties involved in a shipment together to one place offering smart contracts and traceability so that everyone always knows what happened and what’s next. Watch this explanatory video to understand the full concept behind Tradelens:
Accenture, Kühne + Nagel, AB InBev and APL
They formed a consortium together with European customs organization to test blockchain solutions that can eliminate the need for printed shipping documents. Thereby they want to speed up the entire flow of transport documents and reduce the requirement for data entry by up to 80 percent. The consortium already tested their technology already with 12 real shipments but did not launch a “real product” to the public yet (compared to Tradelens).
You think two big blockchain consortiums are enough? There is a third one which was formed by CMA CGM, Cosco, Evergreen and Yang Ming amongst others together with Cargosmart and Oracle. Cargosmart uses Blockchain technology because trust and transparency are key in reducing the amount of time-consuming paper-focused processes by 75%.
What should you do now?
It’s definitely a hype, but how can you use this for your business now? What will be the impact of Blockchain for companies involved in shipping and container logistics? We think the adoption of blockchain will be a slow burn, considering the challenges ahead including organizational resistance to change, cost of technology and the time it will take to build a network of distributed parties to participate. Analysts believe Blockchain will take at least five years to get real commercial traction as the key is to rethink how shipping parties interact. Potential hurdles for a successful usage of the technology include the questions “who will build blockchain technology?”, “How does one system gets to a critical mass?” and “to what degree can industry participants agree on standards?”. We think there is a cultural and a tech question. Tech problems will be solved, but will one “consortium” get all participants to agree on the same standards? How can you trust the company offering Blockchain technology in container logistics?