The global shipping market is a highly paper based system, involving a significant number of parties within the vast ecosystem. From the container ship owners to the port owners, to the customs agencies, to the freight forwarders to the transportation companies and the retailers who may own the stock on board.
With any global container shipment, there are around 30 paper based documents required each time they leave a dock and arrive in another dock. This means a massively inefficient system, with many delays and a massive lack of transparency and planning capabilities.
One of the first recognized global use cases for Blockchain technology, this complex use case has many organizations looking at solutions. Many of these are focusing on specific areas within the process, and this is allowing progress to be made at speed. The entire process will take years to develop, but the vast number of parties involved is ensuring that real progress is being made daily.
For example, Cargosmart and Oracle, have estimated a 65% saving in managing the shipping documentation and paperwork. This is a significant efficiency saving, on top of the benefits of improved transparency to allow the whole ecosystem to react faster and smarter to the ships arrival in port.
- Enhanced predictability of the arrivals – this allows all the parties involved to prepare of the ships arrival, with full knowledge of the contents and its location on the vessel.
- Global shipping paperwork significantly improved – e.g. Bill of Lading
- Delivery transparency and accuracy is greatly enhanced – if you know that the ship will arrive at x hour, and be unloaded by y hour, you can ensure your transportation is ready to collect the shipment as soon as it is ready. This can then be shipped straight to the warehouse or stores.
Global Shipping and Freight benefits and outcomes
“According to the World Economic Forum, the costs of processing trade documents are as much as a fifth of those of shifting goods. Removing administrative blockages in supply chains could do more to boost international trade than eliminating tariffs. Full digitization of trade paperwork, reckons the UN, could raise Asia-Pacific countries’ exports by $257bn a year.
The prize is a revolution in world trade on a scale not seen since the move to standard containers in the 1960s — a change that ushered in the age of globalisation. But the undertaking is as big as the potential upheaval it will cause. To make it work, dozens of shipping lines and thousands of related businesses around the world — including manufacturers, banks, insurers, brokers and port authorities — will have to work out a protocol that can integrate all the new systems onto one vast platform.
And the benefits wouldn’t be confined to shipping. Improving communications and border administration using blockchain could generate an additional $1 trillion in global trade, according to the World Economic Forum.”
“A single shipment can require hundreds of pages that need to be physically delivered to dozens of different agencies, banks, customs bureaus and other entities.
In 2014, Maersk followed a refrigerated container filled with roses and avocados from Kenya to the Netherlands. The company found that almost 30 people and organisations were involved in processing the box on its journey to Europe. The shipment took about 34 days to get from the farm to the retailers, including 10 days waiting for documents to be processed. One of the critical documents went missing, only to be found later amid a pile of paper.
More than $4 trillion in goods are shipped each year, and more than 80 percent of the goods consumers use daily are carried by the ocean shipping industry
The maximum cost of the required trade documentation to process and administer many of these goods is estimated to reach one-fifth of the actual physical transportation costs. According to The World Economic Forum
By applying the technology to digitize global trade processes, a new form of command and consent can be introduced into the flow of information, empowering multiple trading partners to collaborate and establishing a single shared view of a transaction without compromising details, privacy or confidentiality.”