From the CSA president, David Jean-Marie

Delivering greater efficiency

Blockchain technology has been gaining significant traction across various industries, with shipping taking a particularly keen interest. This is so because this solution has the potential to save the global shipping industry billions of dollars.

The appeal of blockchain technology lies in its ability to allow the industry to go paperless while enabling all parties to benefit from a transparent and secure online environment throughout the supply chain. The management of all transactions is decentralized, as it takes place collectively by the network of participants in a peer-to-peer environment.

IBM and Maersk are currently partnering to use blockchain technology to manage and track the paper trail of millions of shipping containers across the world. Also, the Israeli container shipping company ZIM recently completed a successful trial of a blockchain solution to carry out paperless bills of lading in which all parties in the supply chain received original electronic documents.

Most of the shipping sector’s transactions are currently paper-based. IBM estimates that the cost associated with document processing and administration can be as high as a fifth of the physical transportation costs. And this figure increases when paperwork is delayed, lost and altered.

Blockchain technology promises to reduce paper-related expenses through the creation of a permanent and transparent database that can be accessed by all relevant parties. All parties need to agree before a transaction can be confirmed or modified, making it a secure platform to exchange sensitive documents and even transfer funds.

So the benefits of this new technology are clear – it can reduce fraud and errors, cut down on the transit time of goods, improve inventory management, reduce costs and eliminate waste. The advantage of making calculations, approvals and other transactions automated and paperless is, indeed, a powerful selling point of this solution.

Points to consider

Although the application of blockchain technology in the shipping industry is far from achieving maturity, there is enough evidence to support being an early partner in this evolution of maritime commerce. Preparing to adopt the technology early has the potential to ultimately increase your competitive advantage.

During this period of preparation, it is useful to consider several questions that might arise from the deployment of this technology. Will the level of automation that can be created by blockchain eventually replace a significant number of jobs in our region? If so, how do we deal with this issue? What kind of capital outlay will be required and will it be within our reach?

There will be hurdles on the path towards wide-scale adoption of blockchain technology, but the benefits make this the inevitable future of the shipping industry. It has the ability to increase profitability and positively impact vessel operating efficiency and our environmental footprint. 

The coming year and beyond will certainly prove to be an equally challenging and exciting time, as shipping becomes more closely aligned with the wider supply chain. I believe that any progress we make will be predicated on working together to strengthen our position and actively taking steps to mitigate industry challenges. I look forward to participating in this concerted effort to maintain our viability and competitiveness in the global industry.

David Jean-Marie
President 
Caribbean Shipping Association