Shipping bananas: The next shipping revolution is here
How blockchain can transform the sustainability and efficiency of supply chains
Ever thought about the containers so synonymous with the shipping industry was the last major technological revolution in that sector? Who would have thought that putting goods in giant steel boxes actually paved the way to increased trade and efficiency? Throwback to pre-1960s, goods were loaded and offloaded from ships in all forms of containers; gunny sacks, wooden crates, barrels. Not very efficient, was it?
Fast forward to present day, containerization is the norm and thanks to globalization, we have seen massive infrastructural improvements made to the industry from those ever-growing humongous vessels to robot-operated ports. Just one thing, all these tech pretty much rely on tons of good ol’ paper documents.
Such documentation changes dozen of hands. And as with all things manual, things are bound to be less efficient, much less to say getting lost. And here’s where blockchain proves an edge. The transparent and irreversible nature of the technology builds on a trustless system, cutting down the need for layers upon layers of assurance and underwriting, amongst others. All these simply goes towards increasing the efficiency of the global trading network. Hence, this perceived last frontier to revolutionize trading networks is extremely lucrative, with the World Economic Forum estimating an additional $1 trillion in global trade with the advent of applying blockchain technologies to the industry. Hence, it is not surprising that shipping titans have given fresh impetus over the past couple of years to collaborate with technology firms in harnessing and driving the next revolutionary wave.
Maersk and IBM collaborated to build TradeLens, a blockchain-enabled solution designed to foster greater information-sharing and transparency in global trade with more than 94 organizations signing up to the platform built on open standards. Ernst&Young and Guardtime launched the first blockchain platform for marine insurance in collaboration with Microsoft, Maersk, MS Amlin, ACORD amongst others. Singapore and Abu Dhabi ports also partnered with various firms to drive the development of a blockchain platform.
Minimizing the carbon footprint
Cutting down on the paper trail is just one of the direct environmental impact by taking the documentation on-chain. In 2014, Maersk tracked a container of avocados and roses from Kenya to the Netherlands, only to find that the entire journey involved about 30 independent entities, from farms to consumers. It took 34 days of which 10 days were in waiting for document processing. Zoom out of this scenario and it is not hard to imagine how much perishable goods are actually rendered useless due to the paper trail. And all the resources could have gone into producing these goods. And with 90% of global trade carried by sea, it’s not difficult to visualize how complex, yet important, it is to push for a breakthrough in the maritime sector.
Reaching a consensus
Even though containerization continues to proliferate and modernize, the fact that the same container might be holding goods from different suppliers to even more customers pose a problem for transitioning to a uniform electronic system — there are simply too many standards across industries to align. Which is why documentation has always been lagging. Similarly, with multiple entities coming up with different standards and platforms, it will, nevertheless, continue to pose a huge challenge for stakeholders to come together to adopt an industry-wide standard in adopting blockchain.
Much less to say, blockchain technology is still at its infancy, and the stability and throughput of most blockchains might not be able to keep up with the sheer magnitude required for mass adoption in the maritime sector. Hence, even before actual applications gain momentum, one of the showstopping issues to resolve is to identify a common blockchain technology where development is based on — one that is transparent, secure, and fast enough to carry the weight of global trade, sustainably. And better still, one that allows different blockchain to communicate with one another. If such a consensus can be reached, then it will not be too long before blockchain starts reaching into the lives of people, starting with that fresh banana you peel open.
About the author: Weimin Teng
Thinker+Wanderer. Can be found somewhere between the mountains and sea snapping photos when not thinking about finding the best solution to solve a social problem.
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