Stefan Kukman, founder and CEO of CargoX, looks at the past, present and future of maritime’s efforts to conduct business online.
The shipping industry has a thing for platforms. Ever since the industry started to embrace technology, the idea of having a single place for all parties to interact and share data has been a Holy Grail for many of the major players.
INTTRA, founded during the dotcom boom by the major carriers and now recently acquired by E2open, was one of the first. Others have since followed, with mixed results. In more recent years, one-stop shops offering to take out the middleman (usually meaning freight forwarders) have tried to target end-users specifically.
It’s not hard to see the appeal. We’re living in the Efficiency Era – as cost-pressures continue to increase, everyone is looking for ways to reduce outgoings and maximize margins. Currently, every business involved in the shipping of a container from point A to point B has to share different bits of data at different points in different ways. The right platform could simplify the entire process, cutting out time and resource currently spent on the sharing of information, quite often in duplicate.
That’s the theory. In practice, there has never been one platform that worked for every part of the ocean supply chain. What’s stopping this? Is it a technology issue, a cultural challenge, or a combination of the two?
Changing the approach to technology
Part of the challenge has always been the way the industry has historically approached technology, particularly implementation, and how it is then used to share data. Different businesses require different types of data – that’s a given in any sector. In shipping, however, that fact of life has been turned into a major obstacle as each operator, whether a carrier, a port, a forwarder or a BCO, has developed their own systems and ways of working. When the time comes to deliver a shipment, each party then demands information be compiled in different ways.
The first platforms were supposed to fix all that, founded as it was by carriers as a neutral entity. And it worked, to a degree – many of the major players used them in some way. The problem was that shipping isn’t made up solely of major players – there is any number of smaller businesses, mainly shippers and forwarders, that want to book shipments, and they were often blocked out of the platforms due to cost.
This is ironic because digital platforms should be the ideal solution for smaller operators – self-service, done in their own time. Yet when there is a requirement to significantly invest in specific systems, participation is always going to fall, with all but the largest of businesses refusing to sign up.
That’s not to say that existing platforms were trying to exploit users – shipping is a complex business and having the catch-all technology to support it was always going to be expensive in the early years of the century. To be a sustainable entity, prices needed to be sufficient to recoup costs and support future investment.
Now, however, things have changed. Digitalization has brought down the cost of so much of technology, and shipping is no different. The reasons for high barriers to entry are diminishing – even the smallest of start-ups can purchase sufficient technology to connect to the most complex of systems, while the operational expenditure (OPEX) of running these systems can be brought down by a multitude of new innovations.
What hasn’t changed is the requirement for a platform that can work for all participants. A way to connect to existing systems (and thereby remove the need to invest in yet another new piece of kit), so that participants only put in and get out the data they require, with low barriers to entry, that’s completely secure, transparent and open.
Deploying the hype
Anyone that’s kept half an eye on the shipping media over the last couple of years will no doubt recognise the demand for a solution that’s secure, transparent and open, with the potential to integrate seamlessly with existing systems. They are the chief benefits of blockchain, certainly shipping’s, if not the business world’s, most hyped technology, at least in recent years.
Hype can be a negative, it’s true. It can mask the potential drawbacks, only focusing on the positives, and in so doing accentuate any issues when they come to the fore. After all, you have further to fall the closer you are to the Sun. Yet the reason there is the hype in the first place is that it has the potential to solve the issues the shipping industry faces.
Blockchain is already being used in a variety of ways in shipping, targeting specific pain points, such as bills of lading, container no-shows and verifying container weights. There have even been some attempts to build platforms based on blockchain, both in and out of shipping. However, with the former, there seems to be a trend to focus on private blockchains, with parties required to participate on the terms of the platform. In this instance, how does the platform differ from any of those that have gone before it, save for the fact that it’s built on blockchain?
True, open blockchain is about removing obstacles, not creating new ones. Simply creating a self-contained system will only partially solve the challenges shipping faces, if not exacerbate them. The key is interoperability – yes, any digital platform needs to be completely secure, but that shouldn’t be at the expense of linking with other systems.
Building the foundations for the new shipping industry
To that end, a new approach has emerged as the underlying technology that can power services to drive a wealth of industries and environments. This approach, the Blockchain Document Transaction System (BDTS), takes the fundamentals of blockchain – interoperability, transparency, security – and applies it to a platform that can create, view, share, encrypt, seal, and transfer data to the intended recipient.
It’s completely secure, with users needing a combination of their identities plus a private, unique key to access the data they hold.
The idea is that platform users can build solutions on the BDTS that enable organisations to implement secure methods for transferring documents to natural or legal persons, maintaining clear processes, transparency, and unlimited archives. Plus, with interoperability built on, there’s minimal upfront investment required and the whole process can lower IT-infrastructure costs as it removes the need for resources to store and secure data in other environments.
For shipping, that means bills of lading can be created, verified and transferred as required, cutting the time to share the bill from weeks to minutes. That means consignment information can be created and shared with carriers, ports and customs officials well in advance on transportation. That means teams of customer service agents can focus on providing high levels of service to customers, and not spend their time uploading the same data multiple times.
It means trusting the data you’re given, because you can identify who provided the information, and being able to plan your operations accordingly.
Ultimately, it means having the foundations to build a more efficient and profitable shipping industry.
A platform for the future
Something has to change. There will come a point when the shipping industry can not simply cut anymore. It needs to change the way it works to build sustainable growth. It needs a platform on which all parties can share information equally – the only way it can stay competitive and profitable in the long term.
Blockchain offers a solution, based on the principles of transparency, trust, low barriers to entry and interoperability. Yet only truly open platforms can deliver that – any sort of closed system is no different to the myriad other non-blockchain offerings currently in the market. In an industry so interdependent on multiple providers, even for the smallest of transactions, choosing an approach that champions interoperability must be the way forward.