Page 44 - Inbound Logistics | April 2017 | Digital Issue

IT MATTERS

BY JOHN MALEY
John Maley is Global Leader, IBM Freight Logistics,
askibm@vnet.ibm.com | 800-426-4968

Blockchain Set to Shake Up Shipping

nternational trade is a maze of regulations, and mostly the process, blockchain enables
manual, inefficient processes that lack transparency. This more transactions overall. Contracts
are verifiable, signed, and encoded
I is all about to radically change with blockchain technology. in programming language to allow

organizations to reduce the time
Shipping today is riddled with doc- increase transparency. For example, they need to complete legal or
umentation, regulations, and policies information from smart devices will contractual commitments.
that require certificates of origin, let- be able to communicate to block-
ters of credit, bills of lading, vessel chain-based ledgers to update or Transforming Networks
manifests, and customs declarations. validate smart contracts. Blockchain technology has the
Blockchain converts documents, Supply chain operators could potential to radically transform multi-
such as traditional vessel manifests, also begin using blockchain to track party business networks, enabling
into a digital ledger that all parties information such as the movement significant cost and risk reduction,
can see and share. This distributed of intermodal containers. This infor- while introducing innovative new
database maintains a continuously mation can then be enriched with business models such as real-time
growing list of data records hardened third-party situational data such as transfer of ownership while goods
against tampering and unapproved weather or traffic information, which are in transit. Other business models
revision, and is about to shake up the can help address if a delivery is late or allow for services such as shipping,
industry in much the same way con- behind schedule. finance, ground transportation, and
tainerized shipping did 60 years ago. For example, if the temperature insurance to be packaged together.
in a container drops while shipping For years, record keeping in the
Increasing Transparency frozen food, the technology will freight and logistics sector has been
The mere size of the ships trans- know where and when the food inaccurate due to human error and/or
porting cargo around the world melted. The distributed ledger is the incorrect calculations. Computers
today requires technology, such as centralized point of control and can have helped, but there is still room
smart containers, to monitor what is be reviewed to determine which party for improvement.
onboard a vessel. But this technol- is at fault. Blockchain is a technology for
ogy can only monitor factors such as Blockchain will benefit the a new generation of transactional
the container’s location, and doesn’t logistics process by building trust, applications that establishes trust,
track the numerous hands it passes reducing costs, and accelerating accountability, and transparency
through as it is transported, loaded, transactions. Transactions and while streamlining business
unloaded, bought, sold, and stored device data can be viewed peer- processes. It is an operating system for
en route from the start of the supply to-peer, removing most legal or interactions and has the potential to
chain through delivery. contractual costs. vastly reduce the cost and complexity
Blockchain technology will help By removing the middleman from of getting things done. n

42 Inbound Logistics • April 2017