OPINION: Blockchain can Revolutionize the Shipping & Logistics, but is it Ready?
The pandemic led to a disruption of the global sectors that also included the ocean trade. International trade witnessed an extensive impact on operations, causing a sharp decline in trade activities worldwide. Only a few technology-driven service providers managed to overcome some of the Export and Import industry's challenges during the pandemic. Interestingly, however, the exporters and importers' stumbling-blocks could have been handled efficiently if the entire ecosystem was backed by digital infrastructure.
Besides providing significant macro contributions to the national economy by creating national income and foreign investment influx, the shipping & logistics industry is also one of the largest job-creating sectors worldwide, employing more than 40 million people in India alone. Therefore there is a pressing need for a complete digital transformation of the industry to handle international shipments proficiently.
Several challenges have always plagued the industry. While the delay of shipments has remained one of the primary concerns for shippers, cargo loss and manual errors has been a significant logistics management issue. Cancellations of orders and irregular cargo movements have crippled the industry today, resulting in losses due to inefficiency. The COVID-19 pandemic that disrupted supply chains worldwide further highlighted the key challenges and the essential nature of the sector, reiterating emergency response and preparedness.
In the wake of the pandemic, the shipping industry played a vital role in the movement of food supplies, medicines, medical equipment and other essentials. It, therefore, became utmost necessary to create a digital ecosystem that streamlines the logistics processes and is better prepared for such untoward incidents in the future. Thus, the pandemic emphasized the need and value of digitization, which would offer complete transparency and control over the movement of cargo.
The current state of traditional processes has left the EXIM stakeholders struggling with a lack of real-time competencies and data security, resulting in billions of business losses. Some companies currently use track-and-trace solutions by using various technologies that have limited capabilities. The technology, however, falls short of providing end-to-end visibility, besides failing to offer real-time data and transparency. As a result, there is a renewed focus on shifting away from time-consuming, report based approaches to reliable mechanisms that enable real-time, transparent data-sharing among the ocean trade stakeholders.
A technology that provides improved security and accountability for all the stakeholders involved in the movement of goods and is accessible 24x7 for real-time data is the need of the hour for the shipping and logistics industry. It can be achieved in supply chains through a centralized digital ecosystem and end-to-end resolutions powered by the latest Blockchain technology. The technology can track and trace shipments quickly, efficiently and accurately while protecting the consumers and the organizations adequately.
Greater visibility can help uncover hidden costs by providing real-time data for analysis. The predictive analysis uses all the historical data based on past vessel or ports' performance, besides factoring in weather, geographical and political factors to provide accurate delivery windows. It boosts productivity across the entire supply chain, making both shipping companies and shippers happy. Real-time visibility can also provide data on fleet utilization, opening new freight hauling opportunities and securing new businesses.
A blockchain-enabled platform's advantages go beyond real-time tracking of the shipment, lower operational cost, increased efficiency, quick customer redressal, reduced paperwork, holistic data analysis.
Owing to enhanced transparency, Blockchain-enabled platforms make it impossible for users to hack or trick the system, thus eliminating the need for third-party involvement. Besides, the technology also provides holistic operational visibility, which has been elusive within supply chains, primarily due to companies working in complete siloes and data sharing among value chain stakeholders being considered sceptical. The interest in data intelligence has fostered supply chain connectivity, with several consortiums created within maritime networks — notably bound by blockchain technology. It can, therefore, make it much easier for different carriers or shippers to share sensitive data. Besides, companies could collaboratively create trade finance and supply chain solutions equipped with features that can act as a ledger or record book making it one of the best shipment tracking technologies.
Maersk and IBM's blockchain joint venture named Tradelens have enabled information sharing among the stakeholders and collaboration across supply chains, bringing in improved transparency. More than half of the world's ocean shipment moves are currently being powered by Tradelens. However, for companies to adopt and explore the full potential of Blockchain as a technology, there is the impending need to build an end-to-end digital infrastructure offering standardization across the supply-chains.