While blockchain conversations are often limited to fintech and digital asset management, a wider range of industries can benefit from its key values: decentralization, visibility, and cost reduction.
Specifically, there’s a lot of room for exploring the applications of blockchain networks in the maritime industry. At the moment, there are obvious redundancies in shipping, energy management: prevalence of paperwork over digitized communication, lack of reporting transparency, fraud, and others.
In this post, we will take a look at 6 blockchain use cases that mitigate these and other challenges.
Blockchain Applications in Ports
Ports all over the world have been adopting decentralized ledger to bring transparency to operations, improve resource management, and keep the trading community engaged. Here are five promising and impactful blockchain applications:
Port of Rotterdam: Decentralized Energy Grid
In 2019, Port of Rotterdam reported the ambition to design a real-time energy trading platform, empowered by blockchain and AI. It monitors supply and demand levels and adjusts prices in real-time, improving the quality of resource management and decision-making speed.
The use of blockchain helped eliminate intermediaries from trading: the network relies on smart contracts to identify and validate transactions.
The impact of the P2P energy grid has been outstanding thus far: a 14% revenue increase for energy producers on the one hand, and 11% cost reduction for buyers.
Seaport of Antwerp: Using Blockchain to Improve Traffic Management
Recently, Antwerp’s economy has been steadily growing, making the local port second-largest in Europe. The trend resulted in the increase of freight volumes and unveiled container management challenges.
To streamline and secure container release, the seaport turned to blockchain. Specifically, the team decided to build a decentralized platform for identifying cargo and keeping immutable records of content release.
T-Mining, the development team hired to work on the project, explained the benefits of integrating blockchain into operating processes:
- Clear digital rights that ensure no one but the owner can collect the container at the terminal.
- Immutability - all activities are recorded in the blockchain and cannot be edited.
- No need to enter PIN codes for identity verification - traditional authentication strategies will be replaced by fine-tuned smart contracts.
Tradelens: Fostering Collaboration and Transparency
Tradelens, a joint effort of Maersk and IBM, is one of the most impressive blockchain use cases up to date. The platform allows traders to monitor transactions transparently, access documents and reports.
When the pilot project was announced, security was a number-one concern in the maritime community. The development team mitigated the challenges by implementing:
- Enterprise-level user authentication (the platform is invite-only).
- Regular encryption test and a set-in-stone release schedule for new security patches.
- Following security compliance standards (ISO27001).
Blockchain Applications in Shipping
Shipping industry is full of inefficiencies and non-compliant service providers. From fake lading bills to under-invoicing, fraud increases shipping costs by 10%. That is not the only problem halting the industry’s growth and development: there are few efficient ways to monitor the quality of refrigeration, plan fastest and safest routes, and track transportation.
Here’s how blockchain helps streamline shipping operations.
Using Ethereum to run shipping transactions
The Ethereum blockchain can (and has already) become a reliable backbone for processing high-volume shipping transactions. In fact, in 2018, 300cubits have successfully completed a blockchain-based transaction. As a result, a 40ft cube container was delivered to Brazil.
The key benefit of using Ethereum to process shipping transactions is transparency. All transactions are visible to the network and stored in the blockchain immutably (in fact, if you want to see the details of the transaction, you can easily look it up using ETH blockchain explorers like Ethscan).
Blockchain for Fuel Tracking
The bunker industry is highly traditional and reliant on paper-based notes and reports. These are subject to loss, fraud, and aren’t as transparent and accessible as digital solutions. Conversely, blockchain can help streamline fuel quality assurance by tracking data throughout the supply chain and recording it on the immutable ledger.
A blockchain-based fuel tracker was released as the result of a union between Blockchain Labs for Open Collaboration and Marine Blockchain Labs. Two teams built a blockchain-agnostic (not affiliated with specific networks) platform that automates capturing, tagging, and securing fuel data using smart contracts.
Smart Bills of Lading
A Bill of Lading (B/L) is a contract, required by the Maritime Law, that identifies the ownership and receipt of a carriage. On average, these are expensive to design and transport.
Also, the current approach to handling Bills of Lading is resource-wasteful - statistically, a single issuer (2% of the total market share) uses over 4 million sheets of paper each year.
Most importantly, Bills of Lading are subject to fraud (e.g. falsifying signatures and using company logos for added credibility).
Smart Bills of Lading help streamline the costs of issuing and transporting documentation. CargoX is among the most promising projects in the field - it’s a paperless blockchain network that uses B/L tokens as proof of container ownership.
To ensure security, the project has a “bug bounty”, encouraging hackers to discover security exploits and report them to the development team.
Until recently, the maritime industry was moving along the trajectory of slow, incremental change. As a result, the industry suffered heavy operating losses and was highly vulnerable to fraud attempts.
The blockchain convergence with shipping and port management projects is a win-win solution: it fosters transparency, improves accountability, and automates redundant processes (e.g. PIN-code-based authentication).
There are numerous blockchain applications in the field: ports can rely on platforms like Redot - industry leaders in high-volume trading - or network explorers for transaction monitoring. In the future, we will witness a faster and more decisive growth of blockchain technology in the maritime industry. It'll undoubtedly fuel cost reduction, freight security, and operating efficiency.