It’s not often that the maritime industry is seen as a technological leader, but when it comes to blockchain, the maritime industry has shown that the technology can have incredible benefits.
So says, Robert Morris, Vice President of Global Laboratories at IBM Research, in a recent interview with Control Engineering Asia.
First, a quick update for those that don’t know. Blockchain is the technology that sits behind digital currency Bitcoin. Recently, there has been a surge of interest in blockchain due to its security and transparency.
Essentially, blockchain is a digital ledger that is validated as a virtue of existing. The ledger consists of a set of data batches, called blocks, that link together using cryptographic validation. That’s the security part. The transparency part comes because blockchain isn’t stored in a master location, and it’s not managed by any single entity.
Instead, blockchain exists outside the control of all those that use it. By being distributed and existing across multiple computer at the same time, anybody can have a copy, and no one can alter it after the fact. When you make a line item in blockchain, it will be there forever, and anyone can review it as they please. So, instead of two companies that work together maintaining two sets of internal records, both companies record transactions on the same blockchain ledger, and neither can alter it other than adding a new transaction.
So blockchain creates a database that can only be added to, saves everything that is input, and can be accessed by anyone related to the database at any time, where they all will see the same information. It will automatically save time and hassle. Two or more companies doing business no longer have to wait until both of their internal databases are updated. Instead, they both update the blockchain database and can see everything that has occurred.
The maritime industry offers a great example of how blockchain can provide serious value. Morris explains in the interview with CEA:
In the maritime industry, blockchain can be used by shipping lines, port authorities, freight forwarders, logistics services providers, and government authorities such as customs. They can share information about trade transactions, carry out financing operations, coordinate logistics operations by being aware of a large variety of shipping events, and manage documents such as letters of credit, bills of leading, port manifests, customs clearance documents, etc. This information is shared selectively with a “need-to-know visibility” across the ecosystem. The maritime industry is beginning to use blockchain to improve digitization of decades-old practices and document workflows.
For shippers, blockchain helps reduce trade documentation and processing costs, and eliminates delays associated with paperwork errors. For authorities, it gives real-time visibility into shipments to increase safety and security around border inspection. Shipping lines decrease operational and compliance costs. Port operators reduce operation costs and gain visibility into trade flows, which could lead to new business models. Multiple aspects are aided at once thanks to the unification of all of the logistics involved in such a physical, real-world industry.
This is an example of how blockchain can help any industry. Manufacturing, retail, food and beverage – there are a ton of industries that require massive amounts of shipping and receiving, just like the maritime industry. Blockchain will speed up the process because payments are clear, shipping plans are visible, and paperwork is eliminated so clerical errors won’t destroy an entire operation.
However, it’s not only shipping a receiving that benefit. Blockchain offers huge benefits to the financial industry, as Morris explains:
The ecosystem benefits of blockchain across industries like finance and maritime are similar in terms of decreasing cost, increasing efficiency, reducing time taken for transactions, and improving customer experience. Both industries stand to benefit from the visibility and trusted business processes that can be enabled on the blockchain transaction platform. Joint benefit can arise in areas such as trade finance that better coordinate these linked industry ecosystems.
It will be interesting to see how blockchain streamlines transaction processes across multiple industries. Take the time to look at the technology and consider how it could improve your business in the coming years.