Blockchain in Shipping
The term blockchain is something like the eternal king among buzzwords. For years, it has been haunting the ether, but still not everyone knows what it means. Don't worry, our article will illuminate the matter for you and why it can also make your daily life in the shipping industry a tad bit more convenient.
What is blockchain – a short definition
A blockchain is a shared database that securely stores information electronically in digital format. Obviously, the term blockchain is a combination of the words "block" and "chain".
Simply put: The stored data is linked together in groups, which are called “blocks”. New database entries are appended to the existing block, resulting in a blockchain. A wide variety of transactions such as orders, transfers or information about products or containers can be recorded in a blockchain. However, openly accessible data is never noted or stored.
A blockchain is unique because of the decentralized storage of data across multiple computers. However, the data is not stored directly in the blockchain, but only a digital fingerprint (a so-called hash). The special thing is that the individual blocks are connected to each other using cryptographic methods in such a way that the transactions they contain cannot be changed. The blockchain and digital fingerprint ensure that only its owner or authorized persons have access to the distributed information.
The digital fingerprint acts like a key with which the unchangeable information can be clearly assigned to the information or data. Blockchain systems are now used in many areas in addition to the well-known example of cryptocurrencies. For example, the blockchain is used in healthcare, the insurance sector, in supply chain management or in the energy market.
In fact, we at Hapag-Lloyd (and the shipping industry in general), already use Blockchain technology in some of our digital solutions. We've teamed up with WAVE BL where we use blockchain technology to make BL creation and send-out more convenient and secure.
How can the shipping industry benefit from blockchain technology?
The consensus opinion among IT experts is that blockchain will be one of the key technologies in the years ahead. Indeed, the benefits of the technology are being hotly debated in many industries – and especially in logistics.
One major advantage of blockchain is its high degree of “data integrity”, which means that data is particularly reliable and protected from being accessed by unauthorized individuals.
But what does that mean in everyday, real-word terms? Well, here is one example: The Port of Antwerp estimates that when a container is transported from the Belgian port to its destination, the roughly 30 companies involved in the process have to exchange data some 200 times. This data – such as bills of lading and shipping documents – are often still available in paper form. These documents pass through many hands, and they must be continually updated and checked to ensure they are in the right place at the right time. In addition to being particularly prone to errors, these processes also cost a huge amount of time and money.
In contrast, using blockchain in shipping allows information such as that in a bill of lading to be stored in an uncomplicated, secure and transparent fashion. All authorized persons can view the data relevant to them at any time. In addition, having the data be assigned to a specific author in a clear and unalterable way (“proof of ownership”) makes manipulation more difficult. For our industry, this means a boost in terms of reliability, a considerably shortened processing time and more security.
Hence, we’ve already launched our digital BL tool and cooperations with companies such as WAVE. Furthermore, we committed to adapt to the use of electronic bills of lading until 2030.
The opportunities and advantages behind blockchain usage
As mentioned, security was and still is a big risk when it comes to documentation handling in shipping. But not only that. Unfortunately, it’s not uncommon for freight documents to be manipulated. Counterfeit products are declared as originals, quantities are wrong, and dangerous goods are labelled non-hazardous. In such cases, having a so-called “digital twin” – i.e. a virtual copy of the physical object or process – can provide additional protection.
The identification and origin of the product/process is clearly traceable (“proof of existence”), which makes the risk of counterfeiting or manipulation a lot lower than with conventional processes. Thus, especially when it comes to dangerous goods transport and dealing with incorrectly declared cargo, blockchain can guarantee much higher levels of both safety and certainty.
Blockchain can not only be used to trace the cargo but also the fuel that is being used. By this misleading information about origin and composition of bunker fuels can be minimized. Projects like BunkerTrace are already working on a blockchain based solution to track and trace fuels and lead the shipping industry onto a greener route.
Not convinced yet? Food for thought
When the most famous and blockchain-based crypto currency, the Bitcoin, was introduced back in 2008, it was still very unknown, and a single Bitcoin was therefore significantly cheaper. In 2013, for example, a coffee shop in Berlin offered coffee for 0.11 Bitcoin. Accordingly, this coffee would be worth more than $6,000 today and thus probably one of the most expensive coffees in the world. As you can see, you shouldn’t write off the opportunities that blockchain in shipping offers. It’s quite the contrary: try to educate yourself about the technology and explore the advantages and potential that it keeps in store for you.
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