- The global shipping industry
has historically been plagued with a morass
of complex documentation among a large number of parties,
including customs and border control authorities
who must know the origins, destinations and contents
of incoming and outgoing containers.
These challenges,
the need for trust in the records,
the large number of organizations involved,
and the complex documentation,
make Blockchain an excellent technology solution.
Take for example the shipment of flowers
from a grower in Kenya to an importer in the Netherlands.
The parties involved would include a freight forwarder
who puts flowers from multiple growers into a container,
customs and border protection authorities,
multiple shipping lines, trucking companies,
warehouses and terminal operators.
The chain could easily involve 30 different organizations
and require 200 separate documents.
The shipping industry has relied
on Electronic Data Interchange, or EDI,
technology for several decades.
EDI covers a good chunk, though not all, of global shipping.
It suffers from some significant weaknesses.
The document-based messages are exchanged linearly
among companies preventing end-to-end transparency
from the producer to the end customer.
Also EDI messages are sent in batch format
rather than real time.
Existing processes,
a combination of paper and EDI-based,
have proven to be error prone and wasteful.
The morass of documentation is estimated
to cost as much as 20% of the cost of physical shipment.
Because of needed checks
by customs and border protection authorities,
goods often spend more time in ports than on the ocean.
Given the lack of complete transparency,
there is also significant fraud,
costing shippers an estimated $600 billion a year worldwide.
Determined to find a better solution, in 2014 Maersk,
the world's largest container and supply vessel operator,
initiated discussions with IBM to explore the potential
of Blockchain technology for the maritime shipping industry.
Blockchain could serve as a universal ledger
that would be visible simultaneously to all parties
and completely tamper proof.
By serving as a single source of truth,
a Blockchain could give the needed assurance
to shippers, customers as well as government authorities.
In 2016, Maersk and IBM initiated pilot tests
of a Blockchain solution
with Dupont, Dow Chemical and Tetra Pac.
The solution included the use of permission Blockchains
whereby participants would need permission
to participate in a particular Blockchain.
This approach was important to ensure
that while companies would have access to the records
that pertain to their shipments,
they would not have any access to information
about competitors.
In March 2017, Maersk and IBM announced their plan
to create a global trade digitization platform
for the entire shipping industry
rather than privately just for Maersk.
It would be run as a separate entity
and would be neutral to all parties.
August 2018 saw the birth of TradeLens,
the global digital platform created
by the collaboration between these two companies.
With a hundred major organizations,
including companies as well as government agencies,
already committed as partners,
TradeLens has emerged as a long-sought answer
to the maritime shipping industry's challenges.