How Blockchain Transforms the Shipping Industry
Blockchain technology has the potential to transform the shipping industry for the better. The distributed ledger technology, widely known for its transparency and immutability, can offer benefits that minimize redundancies and increase efficiency. The shipping logistics industry is projected to be worth $900 billion in the U.S. alone, with this figure expected to rise to more than $2 trillion in 2023.
The utilization of blockchain technology in the shipping industry is enabled by digitalization, which has grown exponentially over the last few years. One of the digital advances that are the subject of debates is the Electronic Bill of Lading.
What is the Electronic Bill of Lading?
A bill of lading, also known as B/L, gives a detailed account of the cargo’s journey from the point of origin to the destination. The carrier issues the B/L to outline the path of the shipment. In essence, the bill of lading is a contract that governs the movement of the cargo. The B/L is an important document in the shipping industry and is legally binding.
An electronic bill of lading, or eB/L, is a digital equivalent of a paper bill of lading. The eB/L digitizes the core functions of a B/L.
The electronic bill of lading aims to improve the issues that affect the paper-based model, but the legal security around them have hampered their widespread adoption. The use of eBLs offers several benefits that effortlessly improve upon the paper-based system. Electronic bills of lading have the potential to promote faster document transfers, shorter payment time frames, and less human error due to typing. The paper based-model is at the risk of being physically destroyed by several means such as fires or otherwise.
The migration to eB/L is picking up and there are several software solutions created for this purpose. However, there is no interoperability for the solutions in existence. There is also a question of which legal framework of an electronic bill of lading will be admissible in a court of law.
These questions and more could be answered by the adoption of blockchain technology in the transformation of the shipping industry.
This transformation hinges on blockchain’s core features as well as smart contracts.
Can Blockchain Transform the Shipping Industry?
Blockchain could have a positive impact on the shipping industry mainly due to the inefficiencies found in the shipping and logistics industry and the effective solutions that the distributed ledger technology offers.
The international shipment of goods from the exporter to the importer requires more than 20 different kinds of papers to be filled. Blockchain reduces the number of papers that need to be filled.
The documents used in the paper-based model cannot be traced in real-time and the data quality could make financial reconciliation very difficult. On the other hand, paperless trade allows real-time tracking, visibility of shipment data, reduced errors, faster receipts, and reduced costs in shipping and communication.
In the financial sector, blockchain has been hailed as a breakthrough in cutting out the middlemen. The same principle applies in the shipping industry.
The use of smart contracts eliminates unnecessary third parties and shipbrokers that increase transportation costs and more.
About 10% of the bills of lading used in the shipping industry contain incorrect data that could lead to disputes. Blockchain technology, through the use of smart contracts, can play an important role in reducing these disputes and litigations.
The distributed ledger technology is also tipped by experts to increase sustainability, identify problems in the initial stages and minimize fraud and waste that cannot be avoided due to the use of paperwork.
In many cases, the application of blockchain technology is theoretical, and its use can only be important if practical blockchain-based solutions are developed and implemented.
How FiO is transforming the shipping industry
FiO.one is utilizing its pre-built templates to provide practical blockchain solutions to various industries.
The company has developed an enterprise-grade blockchain solution that allows the tracking of cargo in real-time. This permissioned blockchain only gives access to authorized users who can see data about a specific cargo. This promotes transparency and reduces fraud as it is impossible to alter the data once it has been uploaded on the private blockchain.
The shipping industry has the potential to benefit from predictive analytics but this is not the case as the collected data is not efficiently stored.
FiO’s blockchain solution gathers data from various agents and ports and stores it in one place.
In the end, FiO is:
- Promoting secure data storage
- Minimizing fraud
- Protecting the industry from cybercrime
- Increasing transparency, real-time data tracking, accountability, and efficiency in the shipping industry.
Wrapping it Up
Blockchain technology is transforming the shipping industry in more ways than one, and FiO.one is at the heart of this change.