How Blockchain and IIoT are Bringing Innovation to Shipping
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In an effort that predicts the future of global trade, 17 tons of almonds have successfully been shipped and tracked from Sunraysia in Victoria, Australia, to Hamburg in Germany in a blockchain-based collaboration between Australia's Commonwealth Bank (CBA) and five Australian and international supply chain leaders.
The shipping exercise is a demonstration of a new blockchain platform underpinned by distributed ledger technology, smart contracts, and IoT to facilitate the trade experiment, tracking the shipment from packer to end delivery in parallel to existing processes. The CBA is using the Ethereum blockchain in this project, although they remain open to other options in the future. The CBA platform will be set up on a private blockchain (a network of known and trusted parties), meaning that only participants who are authorized can access information.
The platform digitizes three key areas of global trade – operations, documentation, and finance – by housing the container information, completion of tasks, and shipping documents on a purpose-built blockchain.
Partners were able to view and track the location of the shipment as well as view the conditions, such as temperature and humidity, inside the container via four IoT devices. This level of data provided partners in the supply chain with a greater level of transparency and efficiency regarding the location, condition, and authentication of the goods being transported.
At the documentation layer, the blockchain-enabled supply chain allows partners to upload and access key documents, such as the bill of lading, certificates of origin, and other documents required by customs, which streamlined these processes.
The company notes: "For the purposes of the experiment and in the interest of collaboration, we hope to provide increased visibility across all participants, which will achieve a better understanding of the process flow and shared learnings. In a future commercial environment, the access rights may be more restrictive, allowing participants to protect commercially sensitive information and restrict user access to the relevant information only."
The Need for IoT and Blockchain in Shipping
IoT offers a great way to increase efficiency in shipping. On board-sensors work together with sensors at the docks to monitor the volume of goods and unloading speeds. Data analysis of the sensor data can determine a realistic ETA. Intelligent IoT Messaging technology provides the ability for anyone to query the ETA status of the ship. For example, prior to dispatching a fleet of trucks, the dispatcher can just simply send an SMS text message to the ship using natural language, “What’s your ETA?” If there are delays at the port, the ship will text back an adjusted ETA that is calculated in real time. Furthermore, should any sudden schedule changes occur, the ship will proactively notify the dispatcher. This saves the business a significant amount of money by not wasting man-hours (or polluting the environment) with unnecessarily idling trucks.
In shipping, over 30 percent of the cost of each freight is spent on paperwork between shippers, receivers, distribution centers, rail, truck, sea and air carriers, insurancers, financiers, and regulators. Documentation is intricate, often required in triplicate and easily lost, resulting in even more costly delays. The use of blockchain technology, such as smart contracts, ensures that documentation is clear between parties and cannot be altered and removed without consent.
According to Chris Scougall, Managing Director of Industrials and Logistics in Client Coverage, CBA said, “Our blockchain-enabled global trade platform experiment brought to life the idea of a modern global supply chain that is agile, efficient, and transparent. We believe that blockchain can help our partners reduce the burden of administration on their businesses and enable them to deliver best-in-class services to their customers.”
In 2016, CBA and US-based bank Wells Fargo successfully completed the first global trade transaction via blockchain between two independent banks. This latest project built upon that work, examining how CBA could help its partners optimize working capital and asset utilization and explore trade finance concepts and the potential for in-app payment and invoicing.
Maersk and IBM
Other companies are equally focused on digitally transforming shipping and logistics. In January 2018, Maersk and IBM announced the intention to establish a joint venture to provide more efficient and secure methods for conducting global trade using blockchain technology. The new company aims to bring the industry together on an open global trade digitization platform that offers a suite of digital products and integration services.
Their platform is currently being tested by a number of selected partners who all have an interest in developing smarter processes for trade. As they incorporate learnings and continue to expand the network, a fully open platform where all players in the global supply chain can participate and extract value is expected to become available.
Opinions expressed by DZone contributors are their own.