Over the course of the previous century, major advancements in technology have completely revolutionize commerce on global level. Almost every sector of industry has been affected by these changes, however, this has been especially true for the shipping industry, which has seen entire ports automate with the use of robotics, as well as allowing companies to built bigger ships that are able to transport goods from one side of the world to the other faster than ever before.
Still, although things are changing at a rapid pace, almost every company operating in the shipping industry still relies on traditional paper documents for their administrative purposes.
Now, two global giants, IBM and A.P. Moller–Maersk are looking to collaborate and bring a revolutionary change to the shipping industry. That’s right. The two companies are looking to implement blockchain solutions into the industry with the end goal of optimizing the fluidity of transactions between companies.
A massive undertaking, to say the least. However, if they are successful in their endeavor, this could completely change the maritime industry, as well as significantly reducing the high cost of administration faced by most shipping companies.
The High Cost of Using Paper Documents
According to a representative for Maersk, Vincent Clerc. Sending a single refrigerated shipment from Europe to East Africa involves over 200 communications and will typically pass through the hands of about 30 different shipping organizations before reaching its destination. And of course, this massive amount of coordination comes with an extremely high cost.
In fact, due to the amount of paper communications involved, the administration and documentation costs can represent up to 1/5 of the total cost of shipping a single container.
However, by implementing blockchain technology, companies would be able to streamline this chain of communication and make all their documentation available through a distributed registry. In turn, this would also increase the speed of the shipping process and it’s estimated that it could save the industry several billion dollars per year.
The Blockchain Solution
The blockchain is designed to be a secured distributed registry where all stakeholders have access to the same information.
Aside from being applicable to the maritime industry, blockchain technology could also be adapted to be used in other sectors. By using this type of technology, companies would easily be able to speed up their documentation process and reduce the amount of data entry needed by up to 80%.
Also, applying a blockchain solution could simplify custom checks and data exchanges while a container is on route, which would considerable reduce the risk of fines while shipping across international borders.
For their project to be a success, IBM and Maersk must first convince all those who would be involved that it is a viable solution. This includes customs officials, port authorities, as well as the shipping companies and a unanimous decision must first be made for the implementation to work.