Applying Blockchain in the shipping Industry, Can we get better Results
Mar 19, 2018 Posted / 1575 Views
Blockchain was first introduced in the year 2009 by the bitcoin developer(s) and it become the main technology for the existence of bitcoin. In recent years blockchain has spread beyond bitcoin as it effectiveness, transparency and cyber-secure data sharing attracted a lot of companies in the global scene.
In the early days blockchain was adopted by cryptocurrencies and some financial institutions only. In 2017, Greenwich Associates revealed that it would invest $1bn in blockchain initiatives and projects. At the beginning of this year, the Bill and Melinda Gates foundation announced plans to use blockchain in an initiative expected to help two billion people worldwide without access to banks accounts.
In the logistic and transportation industry especially the shipping industry blockchain has the potential of lowering the cost of shipping goods between different ports around the world thus save the industry billions of dollars. IBM and Danish shipping giant Maersk last year around june announced a partnership where blockchain will be used in shipping to transform the global supply chain.
The partnership which is expected to bear results later this year will help in developing a blockchain system that will help manage and track the paper trail of tens of millions of shipping containers around the world. This will rid the supply chain of human error, unwanted and wasteful delays and cyber insecurity. Commenting on the development, Senior Vice President at IBM said,
“ We believe that the new supply chain we are developing has a very high potential of completely disrupting and changing trade on a global scale. We understood the challenges facing the supply and logistic industry and recognised blockchain as the most potential solution that will allow a significant cost reduction within the global shipping industry.”
Currently most of the transaction processing within the shipping industry is paper-based. In 2014 Maersk conducted a study that revealed the complexities and hiked cost involved with shipping. In the study the route a shipment of refrigerated goods take from East Africa to Europe.It was found that nearly 30 people and organisations are involved with more than 200 different communications between them.
This explicitly explain the current high cost and long processing time for shipments to reach their rightful owners. IBM estimates that the cost involved in processing and communication dur hipping takes up 20 percent of the transportation cost. With delays caused by misplacement or alteration of the paperwork the cost is further increased above the 20%.
Blockchain technology can counteract all these issues establishing an immutable transparent database mutually accessible to all parties involved, where every transaction records are entered. This will enable any type of operation like exchange of sensitive documents such as contracts and transfer of money to be done on chain.
According an estimate by Marine Transport International, using blockchain in shipping could save up $300 for every shipping container by reducing labour and processing costs. Doing the math, a large ship carrying 18000 containers can save up to $5.4m per route if blockchain is Used.
Furthermore blockchain can help protect shipping companies from expensive cyber attacks on their core computer systems. Maersk became a victim of a global ransomware attack which caused outages at its computer systems across the world. The company incurred more than $300 million in lost profits in the third quarter of last year alone. Managing Director Antony Abell of TrustMe argues that blockchain could have prevented the attack from happening.
Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .
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