We have seen many new projects over the past years claiming to leverage blockchain and decentralised technology. Some of these projects have been launched by start-ups seeking to “revolutionise” the shipping economy, such as through tokenisation of ships (whereby a vessel is given digital value represented by tokens).
Other projects have been initiated by the large shipping players using blockchain to design ecosystems amongst various maritime players to gain efficiencies through safe data sharing and automated payments.
What is common to these decentralised projects is the value of joint efforts to create great solutions, which we see happening in all industries.
The developments in digitalization of shipping has been called “Shipping 4.0”, referring to the similar developments in the land-based industry known as “Industry 4.0: The fourth industrial revolution”.
There are quite a few projects within the shipping industry that have been launched in this spirit, including blockchain solutions that allow companies to use, share and transact on data more efficiently, for instance; trading platforms that use smart contracts on a distributed ledger to ensure secure bill of ladings, and a maritime insurance-platform that allow a AP Moller-Maersk to obtain accurate insurance for its vessels.
Collaboration is key
This is most likely just the beginning of these co-operations. Other industries are establishing consortia to ensure common knowledge. This trend is bound to also change the shipping industry from siloes offering specialised services to larger communities of companies acting together to deliver more accurate and possibly joint services to the market.
This will however also mean that single players might lose out. If you are not prepared to collaborate and share data, you might not be able to deliver as accurate and informative services as the market expects.
Decentralised technology the enabler
The enabler for an efficient ecosystem and data-sharing is decentralised technology, which includes blockchain. In a simple chain of production and supply of products that does not require a strict certification of the provenance, a shared database is probably sufficient. But with today’s shipping industry with many various stakeholders — including the seller, buyer, multiple and multimodal carriers, banks, ports, customs, brokers, agents and insurers — a decentralised system based on trust and verified data is much better.
In this system, no single central authority / point of failure may control all data information flow. Smart contracts enable the transfer of digital assets between the parties automatically, based on data shared between the network parties. A private blockchain may ensure privacy around the details each transaction and sensitive data, as opposed to an open blockchain. Simple examples are automatic payments of insurance premiums based on verified location data of the vessel (e.g. hull insurance) or track & trace solution for products where origins and transport conditions are important (e.g. fish, wine, medicines etc.). Another is customs declarations and automatic payments while sailing into the port, which is being tested in Australia. This will reduce administrative delays and allow the cargo to be ready for delivery once unloaded.
Collaborate or lose out
Maritime actors not yet collaborating or leveraging shared data with other industry players or technology companies, might find comfort in the fact that it is still early days. However, the market is changing rapidly and individual players acting alone will most likely be the first to lose.
This opinion piece was printed in TradeWinds on December 14, 2018.