Andrew Fenner, CEO of Swiss-based BitNautic, argues the blockchain revolution could be as important as the containerisation of global trade itself.
Having been involved in the industry for over 18 years I have seen first-hand the problems that owners, operators and charterers face. Being involved in a software company I can also see that there are valid solutions available to us now in order to solve some of these problems.
Shipping and logistics is an industry that is traditional in its ways and built on personal relationships and human interaction. People in the industry are naturally sceptical of new technologies especially if they are being advertised from industry outsiders. We have seen many times over the years products and services brought to shipping that claim to solve issues and problems that quite frankly do not exist.
Technology uptake in shipping has generally been slow mainly because it’s a people business and contacts are the most valuable commodity. Talking to people is a vital part of the industry and not something that will change anytime soon given the nuances of ship borne transport. So far no amount of computing or algorithms can replace that.
If we can get past the concept that not all companies in this space are swindling we do have a very realistic chance of improving many negative situations that arise on a daily basis.
It is important that we are able to demonstrate the real world advantages of the blockchain and how it can be applied to significant shipping problems. Blockchain has some very important applications and can improve many situations were paper based systems are inferior.
The blockchain in a few words is a network where all participants share a common ledger. In this ledger we can store basically any type of data in a transparent way: transactions, text, pictures anything you can normally store in a computer. Since this ledger is shared by all participants, it is impossible to forge or tamper with the data that it contains, making it safer and more secure than any other alternative.
One of the most interesting uses of blockchain is the ‘smart contract’ aspect of the technology. Smart contracts are contracts that are automatically adjusted and moved on through the blockchain when a specific instruction or task has been completed. This could be a payment or an electronic signature (the digital equivalent of a stamp) or an agreed description of goods based on a cargo manifest.
This type of scenario is perfectly suited to a bill of lading (B/L) and smart contracts in general lend themselves well to the current paper processes we see in the shipping industry as a whole. If we can replace paper where it is logical and useful to do so we automatically save ourselves both time and money.
With an electronic smart contract on the blockchain we can perform many tasks electronically safer and more securely than an original. In a scenario where a vessel is delayed waiting for an original B/L in port – with a smart contact this would not happen, the B/L would be instantly available and only in the hands of the person on the block chain and therefore the correct holder of the B/L. This means no wrongful delivery, no LOIs (letters of indemnity – which remain a pain point for the insurance industry) and above all else it means no ship idle time or costs associated with that.
Where blockchain technology can be applied in order to create an advantage for all the stakeholders then we really have the opportunity to drive progress and move the shipping and logistics industry on to the next level. This is a groundbreaking technology with numerous applications all of which can create efficiency.
The message that software companies in the shipping space need to deliver is that there is technology out there available to dramatically improve the way the shipping industry works.
The blockchain revolution could be as an important event as the containerisation of global trade itself, we just have to keep the focus on problem solving.