One of the world’s biggest shipping company, accounting for nearly 15% of the world’s air and sea freight business by revenue, has called blockchain technology one of the most promising in logistics.
Martin Kolbe, Chief Information Officer of Kuehne + Nagel International AG, said, “As part of Kuehne + Nagel’s digitalization strategy, we explore innovative technologies to create benefits for our customers.
Blockchain is one of the most promising technologies in logistics. It has the potential to digitalize many of today’s paper-based processes and overcome the multitude of different interfaces.”
The freight forwarder has joined a number of other shipping companies in a consortium which announced they successfully tested “a blockchain solution that can eliminate the need for printed shipping documents and save the freight and logistics industry hundreds of millions of dollars annually.”
Little detail is provided regarding the blockchain solution itself, such as what platform it used and whether it was a permissioned blockchain, but they say:
“The consortium, which represents typical stakeholders across an international shipment, collaborated to test 12 real shipments, with various destinations, each with different regulatory requirements. The tests confirmed that blockchain can reduce operating costs and increase supply chain visibility.”
The test was supervised by a “European customs organization,” with AB InBev, Accenture, APL, Kuehne + Nagel taking part.
The aim was to digitize through blockchain technology “more than 20 different documents, many of which are often paper-based, [required] to enable the goods to move from exporter to importer.” With the results showing:
“The solution can speed up the entire flow of transport documents, reduce the requirement for data entry by up to 80 percent, simplify data amendments across the shipping process, streamline the checks required for cargo and reduce the burden and risk of penalties for customs compliance levied on customers.”
APL, the world’s third biggest shipping company, said they see “much potential in blockchain technology,” Eddie Ng, head of Strategic Liner Management at APL added:
“As a facilitator of global trade and strong advocate of innovation, APL sees much potential in blockchain technology to accelerate the digital transformation of the container shipping industry, moving us from traditional paper-based transactions to more efficient, more secure and faster processes along the entire supply chain.”
While the biggest beer brewer in the world, thus one of the heaviest user of shipping, called blockchain technology “transformational.” Danillo Figueiredo, VP of International Logistics, AB InBev, said:
“Blockchain technology will be transformational to our business and the world. It reduces mistakes, digitizes information and improves the supply chain process so we can focus on our core business of brewing the best beers for consumers.”
Shipping has risen as one of the earliest adopter of blockchain technology, with the industry an unexpected enthusiast of the innovation.
One of the main reason is because blockchain technology can provide a unique innovation which has never existed before in authenticating goods by in effect giving them a private key.
Linking it with other tech advances, such as sensors, GPS, and so on, one can increase security while also making authentication and verification easier.
That has now seemingly developed to a stage where blockchain technology acts as a collaborative commons. Instead of sending papers around, one can just tap onto the blockchain, something that was difficult to do before because copying digital data is easy, as is faking them. But you can’t do so with blockchain technology.
Cryptographic hashes give each document a unique sequence of numbers and letters that can not be replicated nor forged, unless of course one is hacked and gets access to the private key that signs those hashes.
But even in such exceptional circumstances, one can see that data has been modified and can see by who it was modified. Making deletion of evidence and hiding of tracks very different if at all possible.
These added benefits are giving companies and industries that have been slow to take up technology an “excuse” to upgrade their whole paper based systems and take advantage of 21st century advances.
Thus in the process increasing efficiency and you’d expect productivity. But currently there is a “mystery” regarding the latter as to why it is not increasing.
Our preferred theory is that as we have seen in previous advances, there is a lull period during which companies invest in these innovations and systems, putting up the infrastructure and the processes.
As that is all undergoing, there is no benefit, but once it all goes out in live production, then a productivity boom should follow.
Giving it all an element of a race to the finishing line because those that are first to utilize the technologies, which could include disruptive start-ups, might gain a significant competitive advantage.