Trust is the most important element in Freight Forwarding. With multiple organisations and dozens of people involved in the movement of goods from one part of the world to another, trust is needed to ensure a smooth transport. And yet, as an industry, there is very little trust inherent between the players. Instead, a huge amount of paperwork is required to maintain those relationships.
Blockchain as a solution can provide that missing trust – inherently – if only the different parties would come to the table.
Not only is there trust lacking between the different players in the industry, but the technology solution of blockchain itself is also viewed with a lot of suspicion. Where to begin?
Well, perhaps the first place is to examine the main pain points in the Freight Forwarding industry. As an industry that has been in place for hundreds of years, the methods of operating the transport of goods have changed very little. It might be argued the last major technical change was the introduction of faxes for faster exchange of data. The industry has also been called the most expensive courier system in the world.
The global transport of goods requires multiple players across multiple countries and jurisdictions. There may be from 15 to 30 different people or organisations touching each product. All these entities require paperwork to back up each event which can get as high as 200 individual documents or amendments. With dozens of handoffs at each stage, the costs add up. The errors can add up too. Another ironic point is that these costly interactions do not add value to the product.
When errors do occur, then more documentation and costs arise. And product may be lost or damaged or held up in port while fresh paperwork is obtained.
Some new and innovative technology has managed to creep into the industry in the form of embedded sensors and networked devices in containers to monitor the product. Using the Internet of things (IoT) data such as temperature, weight, volume can be measured in transit; very important when shipping perishable goods such as vegetables.
Where blockchain can add trust is in its truth. With its immutable backbone, a blockchain solution can offer a single version of the truth.
Blockchain can also offer improvements to speed, traceability, cargo safety, invoicing and payment processing. It can reduce costs to assist the intense margin pressure on small operators.
Container logistics is a hugely expensive business costing in the region of $4 trillion every year. When using blockchain the savings start off granular but can quickly become meaningful. Using blockchain to reduce the number of documents required for one container has been estimated to save $300 each. If looking at an Ultra large ship with 18,000 containers the combined savings can jump to $5.4 million. That sum is not to be sneezed at.
“Blockchain is not an island; it cannot solve the trust costs by itself,” says Ernesto Vila, CEO of Consol Freight. “However, when employed with IoT technologies, the savings can be meaningful. We just need to sit down and talk.”
Real-world uses of Blockchain include a security project in the Port of Antwerp, a logistics project in the port of Rotterdam and also a number of early industry pilots including a high profile tracking project managed by Maersk.
In addition, there is the Blockchain in Transport Alliance which seeks to drive industry-wide blockchain adoption. The alliance is a consortium of approximately 400 members spanning the T&L, consumer goods, and technology sectors and includes both established companies and startups.
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