A blockchain is a growing list of records, called blocks, which are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. It allows digital information to be distributed but not copied, which makes it unique and more secure. Blockchain has a strong impact on traditional commerce, making it unnecessary.
The graph below shows an overall scheme of how blockchain works.
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So why Blockchain in the shipping industry?
Shipping, especially maritime, stands at the base of global economy and represents the biggest player in traditional commerce. Given its size and complex logistics, it is definitely one of the least technologically developed industries. Here is where blockchain steps in, with the potential to revolutionise maritime industry and bringing it closer to the 21st century.
To give you some context, some of the largest shipping companies, such as Maersk, Hyundai Merchant Marine, and Maritime Silk Road Platform, have teamed up with tech giants to create blockchain shipping systems to streamline maritime logistics.
How can blockchain help and support the shipping industry?
The concept is relatively complex to those who were not familiar with it before. We wanted to sum up for you the key impacts that blockchain can have on the shipping industry:
1. Maritime blockchain speeds up document flow
By having everything digital, the bureaucracy diminishes. To move goods form importer to exporter, over 20 different types of documents need to be filled. This only increases the time needed to complete operations and leads to delays and inefficiencies. With the use of blockchain, companies could speed up operations and save hundreds of millions of dollars annually.
2. Minimises the risks of penalties and makes cargo checks faster
3. Overall improvement of the supply chain
Having access to big secure data, predictive analysis helps optimise operations, improve cybersecurity, and increase the overall efficiency of the supply chain. Blockchain can help by placing the crucial data in one place and creating a unique platform for solution providers, ports, and agents that operate along the supply chain.
4. Tracking cargo in real time
Knowing the exact locations, arrival times and dates, helps shipping companies plan ahead. They can speed up terminal works and cut down costs. Educated decisions can be made to organise operations & logistics more efficiently.
Maritime blockchain increases trading safety and transparency. When so many parties using a paper-based communication are involved, it gets complicated to have any sort of transparency. Using blockchain, it is impossible to delete or edit without leaving traces, enabling transparency and security. All the parties involved have access to all the information they need/want.
The blockchain-based Bill of Lading created by Maersk and IBM showed in early tests that administrative costs could be reduced by as much as 15% of the value of shipped goods, thanks to tracking shipping containers and eliminating paper documents. This adds up to $1.5 trillion globally and this is just the beginning.
The industry is still struggling with high costs, high level of pollution, complex logistics and operations. However, blockchain technology has be a catalyser for change, simplifying and modernising the industry. Companies like Goodrop, are here to be a part of this movement and help the supply chain cut costs and build efficiency.