Trade as we know it (or don’t know it) has been around for centuries in various forms across various time-lines..
Starting from trade on the Silk roads around 1st century BC, through the Spice Routes between the 7th and 15th centuries to the current age of globalisation, trade has come a long way indeed..
While the business of trade itself hasn’t changed from the basic concept of buying and selling, the methodology of trade and trade patterns have changed drastically especially over the last few decades..
Within liner shipping as well, a lot of changes have occurred over the last 2 decades..
Significant among these changes were the rapid mergers and acquisitions among the top 25 container lines, rapid and massive increase of ship tonnages, sizes and container inventory among the lines and a drastic drop in market share of the bottom half of the top 25 container shipping lines
For example in the year 2000, out of the Top 100 container lines, the top 25 had an 81% market share of which, the top 10 had a 52% market share..
Fast forward to 2019, out of the Top 100 container lines, the top 25 have a market share of 91.20% of which, the top 10 have a whopping 83.40% market share..
This drastic change can be attributed mainly due to the Mergers & Acquisitions that have taken place in the shipping industry in the last decade..
Trade and Digitalisation
While the maritime industry has been progressing in terms of number of ships and containers, certain areas such as shipping documentation have been lagging behind..
With the advent of digitalisation, innovative concepts and technologies like Blockchain, Big Data, IoT, Artificial Intelligence there have been several changes in the industry, which have taken trade and digitalisation to new levels..
If you lose any of the original documents required for the trade, release or shipping line, like if an original bill of lading is lost, the costs can be prohibitive to the extent that customers may be forced to abandon their cargo..
When shipping documentation is delayed, it not only delays the release of the goods to the buyer, but it also increases costs for the shipper/consignee by way of unplanned demurrage, detention and port storage..
Thanks to the above mentioned innovative technologies, the systems are now capable of producing electronic versions of paper documentation including the all-important bill of lading..
These technologies available not just from the big shipping lines or the digital agencies associated with them but also through 3rd party blockchain-enabled platforms which are currently the safest and most secure way of transmitting bills of lading..
Whether it is a blockchain-enabled Letter of Credit transaction, a smart bill of lading issued using blockchain or a blockchain-based coffee exchange, technological innovations are here to stay in the shipping and freight industry..
These platforms allow for the documentation to be transmitted safely, quickly, conveniently and securely to the recipients whether it is a bank or a buyer..
The traders are able to secure release of goods quickly from the carriers or from the banks avoiding the dangers of loss, fraud, and other human errors..
Startups or Big Names
CargoX, one of the pioneers in this space and the creators of the Smart B/L™ the industry’s first blockchain-based smart bill of lading has several successful live use cases of blockchain-based bills of lading..
Not just container shippers, but even bulk vessel operators like G2 Ocean have successfully trialed CargoX’s blockchain-based Smart Bill of Lading solution, when they recently used it for a shipment from China to Peru for Manuchar..
Experts, users, and analysts around the world recently voted CargoX technology as the Most Innovative Solution 2019 at the Transport & Logistics Middle East (TLME) Excellence Awards, where they competed against the likes of Tradelens by Maersk/IBM, Traxens Container Tracking by CMA CGM, Boxbay Jebel Ali Terminal 4 by DP World, and Maqta Gateway (MARSA)..
CargoX scored a double whammy when they won in the category of Blockchain Innovation of the Year 2019 in technology competing against TradeLens, SilSal (Maqta Gateway) Abu Dhabi Ports, the Panalpina and Kosmos Pharma blockchain, the Digital Silk Road initiative by The Dubai Chamber of Commerce and Industry (DCCI) & the Dubai Future Foundation (DFF), and the Further Network.
Accepting the awards at the gala ceremony in Dubai, Vjeran Ortynski, CBDO of CargoX said “We are honored, we are proud, and we are humbled by our amazing double win, especially as we were competing in categories with such respected projects by traditionally leading companies in their business segments.
Both awards are a clear signal that the shipping industry wants and needs neutral public blockchain solutions. With both awards, we accept the responsibility to strive to provide interoperability and compatibility with all meaningful blockchain solutions in the market.
We are sure that together with other initiatives, we can improve the shipping business as a whole, for every partaker in the market, as well as for the better good of consumers.”
Fraud & Cybercrime
While there are several advantages of electronic documents, the jury is still out on whether these documents are legally enforceable and also if it is acceptable by the various authorities in trade and government organizations..
This is because there is currently no legal framework that replicates the existing rights and obligations under traditional bills of lading.. This is seen by many as a stumbling block and begs the question whether you and your country are ready for electronic bills of lading..
While blockchain is designed to provide safety and security in trade and digitalisation, the question of cybercrime and cybersecurity cannot be underestimated..
Fraud seems to be endemic in the shipping and freight industry and if the users are not careful, this can permeate trade and digitalisation through electronic mediums..
The International Maritime Bureau (IMB) identified that there is a prevalence of issuance of incorrect/improper bills of lading – estimated to be around 95% – by NVOCCs which is then presented to banks and other stakeholders in the trading and finance chain, with the aim of defrauding the trade finance system, possibly for the purposes of multiple financing, money laundering, etc..
Trade and digitalisation seems to have become willing partners and these enabling technologies are here to stay..
As the CargoX example shows, there are startups who have achieved much more than the conventional big names in the market and there are also traditional companies who have strengthened their position through adoption or acquisition of technology..
Whatever the size of the business in the industry, one thing that is clear is that everyone will eventually have to adapt/adopt these technological advances in order to stay relevant and sustain themselves..
*** End of Article ***