What blockchain can tell us about MSC Zoe and shipping practices

What blockchain can tell us about MSC Zoe and shipping practices

Shipping is still a black box – it is opaque. We know that folks are cutting corners, or just making uninformed mistakes, but without real visibility and accountability, there’s not much we can do, argues John Monarch, the CEO of ShipChain.

It could be months before authorities know why 281 containers washed overboard the MSC Zoe into the North Sea last week – that is, if are even able to collect enough evidence. Local media are telling us that the ship encountered particularly rough seas and high winds. Whatever the final verdict, the prospect of hundreds of containers — some containing dangerous organic peroxide and lithium-ion batteries — washing up on crowded beaches in Europe has once again brought maritime security and practices to the forefront of public awareness.

With the Dutch military now stepping in to help clear beaches where the containers are washing up, we need to ask ourselves, what can be done to prevent similar maritime disasters from happening in the future? And while this incident is cause for concern, it’s those hundreds of similar incidents that never make the headlines that should really have us worrying about the human, environmental, and economic costs imposed by a lack of accountability in global shipping.

It doesn’t have to be this way. Sure, there will always be natural occurrences that are beyond human and machine control, that’s what insurance is for. But, there’s proven technology that makes it almost impossible for actors to hide poor track records across the supply chain. Blockchain promotes higher cargo handling standards, and just as importantly, identifies precisely where a shipment was mishandled, by whom, and how.

But before we explain how blockchain can accomplish this, let’s talk about how we got to a place where it’s normal for billions of dollars of cargo shipments to be lost or destroyed every year, including washed overboard.

We landed a man on the moon half a century ago, but shipping practices remain stuck in the stone age. Sure, we’ve digitised many functions, eliminated significant waste, and increased visibility, but we’re still relying on the same self-reporting processes we did decades ago. By the time a shipment arrives at its final destination, it’s changed hands dozens of times, but nobody knows for sure when, who, how, and in what condition.

It’s circumstances like these that promote corner cutting – if nobody knows whether a shipper followed best practices, there’s less incentive for him or her to do so. Since a business’s primary goal is to make money, ‘cost cutting’ and ‘corner cutting’ start to look remarkably similar. And even when businesses are doing their best, practices that seem sound might not always result in safe and effective handling of freight.

When corners are cut, accidents happen, and those accidents can be costly.

Basically, shipping is still a black box – it is opaque. We know that folks are cutting corners, or just making uninformed mistakes, but without real visibility and accountability, there’s not much we can do.

That’s where blockchain comes in.

Blockchain’s key selling point is that it promotes transparency and immutability – and these factors, in turn, promote better practices. Here’s how. As transactions are automatically recorded to a centralized ledger, the information is readily available to all parties involved in the transaction, providing maximum transparency. For example, a container is loaded onto a ship after the inspection in Port A, at which time the cargo was in good condition, without any excursions or rough handling. Upon offload in Port B, the container’s sensors upload new information that shows extreme turbulence en-route. The container is trucked to its final destination, and sure enough, there has been some damage.

Two important factors become clear in the scenario above. First, the damage occurred while on board the ship. Second, the damage sustained corresponds to turbulence recorded by the sensors installed on the container. Was the container improperly loaded and secured, was the container improperly stored, was there a power outage? Now, we have a way to identify the problems and correct them!

It’s the immutability of data recorded onto the blockchain that makes it so trustworthy. Once the details of a transaction are logged, they can’t be deleted or altered. Thanks to the blockchain, it’s clear who is at fault, and what needs to be done to prevent it from happening again.

Blockchain promotes better, safer practices. When we apply that dynamic to shipping in general, it creates an ecosystem of accountability because once your digital signature is applied to a transaction – say the handoff of a container at a warehouse between a trucker and a receiver – details such as the time of handoff, condition, transit conditions and more are visible to everyone. Suddenly, cutting that corner looks a lot less attractive once everyone else can see you do it.

The terms, ‘process integrity’ and ‘disintermediation’ are often applied to blockchain protocols for this reason. Basically, they mean that it’s easy to set the rules and make sure that they are followed. The parties in any blockchain-contract transaction know that everything will be done in accord with agreed upon protocols. If everyone is looking at the same data, and there’s no way to falsify it, then there’s no need for intermediation by a third party.

Let’s tie up some loose ends about how blockchain promotes better practices and helps prevents mistakes such as the one that occurred aboard the MSC Zoe in the North Sea, that prompted the writing of this article.

It all comes down to eliminating errors and speeding up response times once they are identified. With this new technology, recording, tracking, verifying properties of physical products, linking and sharing can be done in real time. That’s even easier in the context of the public blockchain, where all this information can be securely aggregated, queried, and leveraged to improve practices. Tracking and tracing shipments via blockchain takes away the potential for human error in most cases while eliminating costs and time delays that plague transactions in today’s supply chains.

We’re heading into an era where load factors such as temperature, humidity, exposure to shock and other details can be agreed upon measures that are built into smart contracts. These measures can be uploaded to a common platform, and be captured automatically by sensors.

Speaking from years of experience, folks in the shipping industry aren’t ‘bad actors’. We are some of the most dedicated and hard-working people you’ll meet. When mistakes happen, it’s not because we’re trying to screw over the people who entrust us with their shipments. Instead, it’s because shipping is a complex and high-stakes business. We’re ready to embrace better practices, and thanks to the blockchain, that’s easier than ever.

When we create an ecosystem that identifies any violations of agreed-upon limits, it actually empowers shippers to respond to problems and mitigate them at the time of occurrence, and take steps to avoid them in the future. We may never know exactly why those containers washed off the deck of the MSC Zoe, but blockchain’s track and trace capabilities offer us a path towards dramatically reducing such occurrences in the future.

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15 Comments

  1. Avatar
    Andrew Craig-Bennett
    January 8, 2019 at 3:02 pm

    If a container jumps into the sea, the lashing system has failed. This may be because the components were defective, because the data (notably the GM, but also the weights) were wrongly entered in the ship’s lashing programme, because the lashings were omitted or not correctly set up, or, most unusually, the weather was exceptionally severe.

    Blockchain can help with box weights, maybe. Only.

  2. Avatar
    Sven Adler
    January 8, 2019 at 4:53 pm

    Wow, what a waste of reading time. Hilarious.

  3. Avatar
    Jack Hutchings
    January 8, 2019 at 5:28 pm

    This article has obviously been written by some one who has never stepped foot on a ship, no matter how good you technology is it can beat mother nature, as long as cargo is carried on the deck of a ship it will always be in danger of being washed overboard.

    1. Avatar
      Mun
      January 8, 2019 at 10:29 pm

      True, the writer has no idea about ship & containers, may be he has some idea of block chain and believes blockchain can solve every thing.

  4. Avatar
    Distrait
    January 8, 2019 at 5:44 pm

    Blockchain why not to please some geeks but lashing chains would be welcome first !

  5. Avatar
    PeterB
    January 8, 2019 at 7:09 pm

    It is known that searching the oceans and its bottom is more difficult than landing on the moon. The reason is the difficult environment called seawater and increasing pressure with increasing depth. A blockchain stops there at the moment the recording device fails because of malfunction, be it water ingress, corrosion, battery malfunction, shocks or whatever, also loss at sea. Already replacing a battery is a potential reason for future malfunction. Probably a whole new service is needed worldwide to replace recorders with malfunction. A reason more to let them fail… Must not think about the CO2 footprint 😉 required to replace batteries…
    Also: @Andrew C-B:
    Through my profession I am familiar with Annex 13 of the CSS Code of the IMO which shows accelerations all over the vessel and methods to calculate the securing effort of a lashing arrangement. For containers another method is used and the outcome can be found in the on-board Container Securing Manual. But it should appear to everybody with a bit of understanding that it is remarkable that it looks like only containers within the mid area of the vessel went overboard and not those near both ends. This means that the vertical component can be excluded and the transverse one is predominant. Remains rolling. Known is also that accelerations from rolling are the same for all containers all over the vessel. An Easterly or East-South-Easterly course with northerly stormy winds – sailing with beam or quartering seas – means, that if the waves’ encountering period is same or a fraction of the rolling period, this will induce parametric rolling. From this we can take that the containers to the ends were secured better. Let’s say sufficiently. Question remains: What the Cargo Securing Booklet requires for a trip from Sines (Portugal) to Bremerhaven (Germany) through the Gulf of Biscay and North Sea in the middle of the winter (average worst case scenario). Then to check what can be found on board (stability figure GM and securing) and what with the cargo on top that went overboard. Here the guesswork starts. The captain is not allowed to sail, if the lashing has not finished. And I believe that lashing has been done properly. So maybe it were those few containers which could be taken as a bonus although and after the ship was already fully loaded on paper and nobody was informed, just handed out the First Mate the bunch of papers, data medium or data transfer file? Let’s wait and see. Perhaps the outcome will have influence on Class Rules for lashing containers in the mid range of the container vessel too.

    1. Avatar
      slawomir
      January 10, 2019 at 8:19 pm

      Peter B. Excellent text . Would venture a theory , that we know each other 😉 I do not know- for sure – seems to be a gut feeling ;-). Cheers .

      1. Avatar
        PeterB
        January 11, 2019 at 5:10 pm

        Cheers from Hamburg

  6. Avatar
    Martyn Benson
    January 8, 2019 at 8:27 pm

    The author seems to be implying that all 28 million containers are fitted with transmitting devices that register every movement, every shock and every event that occurs to a container. The number of containers that have any kind of transmitting capability is minimal (usually only a few reefers and tanks) and many of these are not constantly transmitting at every minute of the day and night whether on-board or on land, full or empty.
    With new technology comes new hypes and new evangelists to promote their beliefs. Blockchain has many potential benefits and is another extrapolation of our increasingly digital and connected world (Big Brother?) but blockchain advocates would do well to remember the GIGO maxim. Just because something is entered into a system doesn’t mean it is right and, if a container is packed badly, with the wrong cargo or the weight is mis-declared, then these mistakes or evasions will perpetuate throughput the process. Blockchain will not prevent that and blockchain will not prevent bad cargo securing or poor seamanship or extreme bad weather.

  7. Avatar
    Andrew Craig-Bennett
    January 9, 2019 at 1:12 am

    @ Peter B:

    Yes. Either last minute boxes or someone forgot some lashings.

  8. Avatar
    Abdul Kader Shaaban
    January 9, 2019 at 7:29 am

    It is prudent to wait and see the final report and not jump into unrealistic conclusions. The writer seems to have never set foot on board ship,reason of which he focused on container and how to further complicate industry with more digitalization the industry. In spite of due diligence, best efforts and training, accident and mishaps DO happen. Slipping of containers overboard is something attributed to manning
    Failure of ,lashing materials and very bad weather encounter in general. Failing lashing sockets, wire, chains, …….etc accompanied with heavy seas hitting and washing through the deck where containers are stowed, heavy rolling and pitching, actual GM calculation of the vessel, and not just paper work……etc., ….etc….

  9. Avatar
    Sergey
    January 10, 2019 at 11:58 am

    It happens because charterers always pushing to take more cargo, but unfortunately most of planers and operators has no idea about own job! They pushing Master and Chief To ignore lashing forces because too expensive to perform 50 or 100 Containers! I master not willing to follow, Charterers sending letters that Master is hard cooperative!
    Believe Me , I know what I’m talking about! I had such experience with very known charterers!

    1. Avatar
      PeterB
      January 11, 2019 at 5:14 pm

      Well, that they will find out this time. Thank you for positive reply to confirm Andrew’s and my suspicion.

  10. Avatar
    David
    January 11, 2019 at 6:07 am

    If you check the photos on Twitter from the Netherlands Coast Guard you can see stacks leaning over but still held together by twist locks. These bays were not lashed at all.
    This was the largest containership in the world. I don’t think it rolls much.
    We have many ships crossing the Atlantic rolling 40° to one side and they don’t lose any containers.

    1. Avatar
      PeterB
      January 11, 2019 at 5:16 pm

      Thank you , noted! Indeed I did see this too, but let’s call this marginal in relation to the extend of the total damage. Let’s wait and see for the outcome.