How could blockchain HELP THE CARGO INDUSTRY?
Written by @BigSteak, Edited by @RealScrout (Telegram @’s)
In 2019, the global trade value of goods amounted to approximately 19 trillion U.S. Dollars [1]. The weight of maritime cargo shipped in the same year was 11.1 Billion pounds [2]. That’s roughly the same number of meme coins launched every second on Binance Smart Chain in weight and dollar value.
It’s an understatement to say that cargo shipping on a global scale requires a herculean feat of logistics and cooperation between all, including the cargo shipping supply chain stakeholders. The shippers, freight forwards, ocean carriers, ports, customs authorities, financial institutions, and of course, the final destination of the goods all must work together to ensure your laptop made in China arrives at your local depot in North America.
Smooth sailing?
Currently, the system works, as evidenced by the sheer volume of goods shipped annually. But could it be more efficient? With so many stakeholders, friction along the supply chain is inevitable. However, to help grease any bottlenecks in the supply chain, the cargo industry could implement blockchain technology.
The most apparent use of blockchain technology in cargo shipping would be the easy and secure dissemination of data. Every piece of cargo shipped comes with a bill of lading (B/L). The bill of lading outlines the journey of your cargo from the origin to the destination. The B/L is issued by a carrier to a shipper to detail the path of a shipment and is used as a contract for the cargo movement. Once the B/L has been agreed upon by the shipper and carrier, a final copy is made available to the customs broker, authorities in the port of entry, and the cargo owner at the final destination.
Storing a copy of the B/L on a blockchain that trusted parties can access across the supply is highly beneficial. It could be viewed and updated through the entire process and would provide a blockchain encrypted audit trail of all critical actions.
This would be a first-generation application to the cargo shipping industry that would deliver real business value. But it would not disrupt, transform, or obliterate existing structures. Instead, it would complement and grow ROI on existing technology by removing friction shared by stakeholders in the supply chain.
Simply put, blockchain technology applied to cargo shipping can be characterized not as a tidal wave of disruption but as a rising tide that lifts all.
There is the pesky problem of privacy here. I would say that the best application, following current privacy regulations, would be a private blockchain because, in addition to addressing confidentiality concerns, they can process more transactions per second than public networks. Lack of scalability is a severe limitation to public blockchain networks. (ETH 2.0 *cough cough*).
Good examples of this blockchain technology in current use are TradeLens [3] and VeChain [4]. TradeLens is a private platform developed by IBM, underpinned by blockchain technology. They enable true information sharing and collaboration across supply chains, thereby increasing industry innovation, reducing trade friction and ultimately promoting more global trade. VeChain’s food & beverage shipping solution allows participants on the supply chain to collaborate on a transparent and trusted data platform. By scanning the QR code on desired products, consumers can acquire detailed information secured by the blockchain, including the source and ingredients of the products, geographic location, logistics information, inspection report even temperature data. The data is time-stamped and cryptographically signed by the party who produce the data.
The pattern that has begun to emerge is one of blockchain complementing existing technologies instead of replacing them. However, in time, the next generation of cargo shipping blockchain applications may be built on public platforms. It will be more disruptive to traditional business models once education, standards, and regulations catch up with the technology.
Website: www.lunarstation.io
Telegram: https://t.me/lunarstation
Twitter: https://twitter.com/lunarstation_
References:
[1] Can Ozkan, U. (2019). What to Expect from the 2020 Ocean Freight Market. [online] More Than Shipping. Available at: https://www.morethanshipping.com/what-to-expect-from-the-2020-ocean-freight-market/ [Accessed 13 May 2021].
[2] Sabanoglu, T. (2021). Worldwide export trade volume 1950–2018. [online] Statista. Available at: https://www.statista.com/statistics/264682/worldwide-export-volume-in-the-trade-since-1950/.
[3] UNCTAD (2020). World seaborne trade. [online] UNCTAD e-Handbook of Statistics 2019. Available at: https://stats.unctad.org/handbook/MaritimeTransport/WorldSeaborneTrade.html [Accessed 13 May 2021].
[4] Tradelens.com. (2019). TradeLens. [online] Available at: https://www.tradelens.com/ [Accessed 13 May 2021].
[5] www.vechain.org. (n.d.). VeChain Whitepaper | VeChain Builders. [online] Available at: https://www.vechain.org/whitepaper/#bit_zxhvz [Accessed 13 May 2021].
[6] FreightRun.com. (n.d.). Shipping Food: Food Transportation and Logistics Services. [online] Available at: https://www.freightrun.com/services/food-beverage-shipping [Accessed 13 May 2021].
