If you are involved in logistics, you know the shipping industry is a document-intensive process. A shipping container can spend more time at a port than in the ocean due to the rigorous approvals and over-reliance on paper transactions. This would all change with the implementation of blockchain systems.
This article discusses a few of the advantages that are pushing shipping companies to shift to a blockchain platform to revolutionize their processes.
Advantages of blockchain for the shipping industry
Reduce physical paperwork
The shipping industry is often viewed as archaic because of the sheer number of documents involved in the process. With smart contracts activated, approvals could be streamlined significantly lowering the time spent at customs checkpoints. Blockchain-based solutions are designed to flawlessly hold documents on a shared digital ledger which would almost eliminate the required physical paperwork. Eliminating paperwork saves the involved parties time and money.
Transparency is not a strength carriers like UPS and FedEx possess, yet blockchain systems promote transparency between participating users. Information is kept in a place where anybody with the proper access key can view previously performed actions. This brings a higher level of visibility to each step that’s taken and potentially lowers the number of disputes between customers and carriers.
Creating secure systems is a requirement. Not only is digital encryption built-in, but users cannot alter the information stored in the blockchain. Transactions are protected by digital signatures to ensure validity while providing fast access to end-to-end supply chain data. Of course, like any technology, fraud instances cannot be completely eliminated and a level of risk is still involved.
The prolific growth of e-commerce has created a demand for alternative delivery methods, including crowd-sourced couriers and different pickup location services. If major carriers refuse to explore blockchain and its implications for the industry, then they risk facing extinction. The market is constantly shifting to find more efficient solutions. If the carriers don’t lead the charge, they’ll be left in the dust.
Read more: Four shipping trends to watch for in 2018
UPS is doubling down on blockchain solutions
UPS recently joined the Blockchain in Transport Alliance (BiTA), a group using blockchain tech in the trucking industry to secure data transfers and speed up transactions. Even with that partnership, UPS is still looking to expand its use of blockchain to other areas. UPS also applied for a patent to use blockchain technology to store data regarding the point of origin, destination, and transportation parameters; receiving and storing in the distributed ledger an indication of completion of a particular leg of the transportation plan; and track shipment completion, including payment.
For international shipments that require more than one carrier, this patent will be pivotal in providing visibility into the shipping route.
FedEx joins blockchain initiative
FedEx is one of the most recent companies to join Hyperledger, a project that supports the collaborative development of blockchain-based distributed ledgers. FedEx sees the value in blockchain and has proven its commitment to adopt the rapidly advancing technology through various partnerships and business developments. As a Hyperledger member, FedEx will have access to enterprise-grade, open source distributed ledger frameworks and code bases to support their business processes. FedEx plans to set the standards for wide-scale blockchain adoption in the industry.
Other shipping companies expand blockchain strategy to improve logistics
UPS isn’t the only company becoming heavily involved in the blockchain. A blockchain-based IBM partnership with Maersk has now expanded to include 94 partners in over 300 locations around the globe. According to IBM, the purpose of the platform is “to connect and provide benefits to the supply chain ecosystem.” Customs authorities, ports, terminals, cargo shippers and logistics companies are all involved in the process. Companies are racing to transform the shipping industry through the use of blockchain-based platforms.
Is blockchain here to stay? Any move that makes logistics more transparent and streamlines processes is a beneficial move to make. Carriers are held accountable which creates integrity in shipping transactions.