In recent years, blockchain in shipping has been poised to revolutionize the chain of custody in goods handling and has been perceived to drive competition and efficiency.
Stefan Sauer of SAP’s Industry Business Unit Travel & Transportation Cargo Transportation has shared his insights on blockchain in shipping at the recently concluded Shipping 2030 Asia conference in Singapore.
Sauer acknowledged that the blockchain technology has come to a point between the peak and the trough in the Gartner Hype Cycle, a methodology that gives a view of how a technology or application will evolve enabling the organisations to manage its deployment to match specific business goals.
According to Gartner’s Hype Cycle for Blockchain Technologies, 2019, blockchain technology is sliding into the Trough of Disillusionment in Gartner’s Hype Cycle. However, “blockchain spring” is anticipated once the core-enabling technologies and use cases evolve and mature, resulting in significant benefits for the enterprise. CIOs must be up and about once it happens.
SAP’s Sauer explained that blockchain has to have a use case that makes use of that technology to transform a process. He added:
“From a software vendor perspective, we want to build use cases that make sense and bring your industry forward and who is the best one to understand what brings an industry forward than the industry itself.”
On Digitising Bill of Lading
Bill of Lading is one of the key components of the shipping industry that sets the terms for the transport and delivery of the item. Sauer noted that despite having a business case for digitising the Bill of Lading to do away with the paper trail it entails, it is yet to gain wide-scale acceptance or use.
The collaboration of Maersk and IBM to apply Tradelens blockchain solution is one example of the technology’s application that needs to be replicated in the industry.
He raised a question to the audience:
“But why, apart from TradeLens, is this technology not used?”
Sauer cited how paper concert tickets have developed into QR codes. From paper tickets, it has developed to paper tickets with a barcode; then to using the barcode instead of tearing the ticket stub; and, finally, to a digital ticket in the form of a QR Code.
“That is the journey shipping needs to make – the digitisation of those pieces of paper,” he emphasized.
Digitising Bill of Lading is far more complex than tracking concert tickets. Unlike in the concert scene that normally involves two key players, the promoter and the buyer, the process of keeping track and transparency of a shipment involves a lot more parties. Sauer elaborated:
“There has to be a journey not only from a technology point of view but most importantly our mindset point of view. We have the ports, the customer, the consignee, the ports, the shipper, the port authority, the banks, the insurers need to change their minds to appreciate and accept a bill of lading doesn’t have to be a piece of paper in an envelope that is mailed from the other side of the world.”
Facing the Challenge
Sauer stated that the challenge is on changing the mindset of some key players in the supply chain, particularly with customs and import/export ports.
In the process of executing paperless shipping, he believes it will take “baby steps” slicing the chain into individual sections. He cited a shipping line that owns a terminal as an example. Digitising document between the two is a good start of the process and could be expanded to other parts of the chain as it gains acceptance over time. He concluded:
“We can’t expect blockchain to be the Holy Grail in a year. It will take time.”
Shipping 2030 Asia 2019 held last 18-19 September at Hotel Novotel Singapore Clarke Quay has brought together visionaries and innovators from both inside and outside shipping, including companies at the cutting-edge intersection of technology and business, to share their ideas and innovations for the future of the shipping industry.