Technology has transformed the shipping and logistics industry, but software compatibility issues continue to pose significant challenges.
One possible solution is blockchain technology, but conversations around its use have been mostly theoretical, and many analysts emphasize that it has been overhyped. While it does have its advocates, it’s been largely viewed as unlikely to transform the industry, partially due to practical implementation complications.
Blockchain has recently been used by major shippers for the first time, reigniting interest in the technology. Is this a sign of changing times, or just a flash in the pan?
What Is Blockchain?
We’ve covered blockchain technology in the past, especially as a potential tool for supply chain visibility, but let’s recap.
A blockchain is a digital ledger that stores transaction information in the form of “blocks” of data. Rather than being stored on centralized servers, the blocks are encrypted and stored on thousands of networks, visible to anyone who is part of the blockchain.
At the time of each transaction, blockchain technology automatically verifies data using other blocks in the chain, and information cannot be edited once it’s been validated and documented. This makes it theoretically incorruptible.
The idea is that if widely implemented, blockchain would improve transparency and continuity, resulting in more trustworthy supply chains.
Adoption of TradeLens
TradeLens is a blockchain solution for shipping, co-owned by Maersk and IBM. The project was announced in 2017, but just over a year later, TradeLens was struggling to obtain partners. Substantiating early concerns about the feasibility of blockchain implementation, most shipping companies were wary of joining a system that was essentially governed by the world’s largest shipping container operator.
By July 2019, however, TradeLens had gained several prominent shipping partners, including ZIM, Safmarine, Namsung, and APL, and the TradeLens ecosystem now has more than 100 organizations. The more parties contributing and verifying data in a blockchain system, the more reliable and stable the system becomes, so these partnerships have stirred up some new excitement about blockchain’s potential.
IBM is working to connect TradeLens with other blockchain platforms and networks, and developing open marketplace applications for use within the TradeLens ecosystem to allow for connectivity with trade finance and insurance providers. Proponents of blockchain hope that interoperability between networks will encourage the industry-wide implementation that the system needs to sustain itself.
Are Your Scallops Safe?
Let’s take a look at an example of the value of Blockchain technology in action. Many U.S. consumers harbor distrust for the seafood industry, in part due to frequent mislabeling and questionable sourcing. Up to a third of retail seafood in the U.S. is mislabeled, according to an Oceana study on seafood fraud, and that percentage goes up with particular products.
The study recommends the development of “a comprehensive and transparent traceability system — one that tracks fish from boat to plate” in order to improve supply chain visibility and combat fraud. Blockchain just might be the answer.
IBM Food Trust has launched a partnership with Raw Seafoods to track the supply of wild caught scallops. With the help of blockchain technology, IBM Food Trust can track the seafood throughout the supply chain, from its origin all the way to the consumer. Because blockchain is nearly impossible to tamper with, fraud will be much more difficult.
Other companies like Bumble Bee Foods (in collaboration with SAP) and Fishcoin are also using blockchain technology to increase supply chain visibility and monitor the authenticity and safety of seafood products. It’s just one of the many emerging use cases, and for some, an early indicator of a blockchain boom.
Is Blockchain the Future of Logistics?
Only time will tell whether blockchain can revolutionize shipping and logistics as its proponents believe it will. Some believe it will be another decade before it truly takes off in the enterprise world, and different solutions will likely emerge by then. Still, a number of shipping companies, 3PLs, and freight forwarders are experimenting with blockchain, and using it to achieve better transparency.