Posted: January 17th, 2024

Applications of Blockchain Technology in Digitalizing Global Maritime Trade Documentation

Applications of Blockchain Technology in Digitalizing Global Maritime Trade Documentation

Blockchain technology is a distributed ledger system that enables secure and transparent transactions among multiple parties without intermediaries. It has the potential to transform various industries, including the maritime sector, which is responsible for 90% of international trade [1]. In this paper, we explore some of the applications of blockchain technology in digitalizing global maritime trade documentation, such as fuel quality traceability, shipment tracking, smart bills of lading, and smart contracts.

Fuel Quality Traceability and Assurance

One of the challenges in the maritime sector is ensuring the quality and compliance of fuel used by ships, especially in light of the new regulations on sulfur emissions that came into effect in 2020. Fuel quality can affect the performance, safety, and environmental impact of ships, as well as the costs and liabilities of ship owners and operators. However, the current system of fuel testing and certification is often fragmented, inconsistent, and prone to fraud [2].

Blockchain technology can provide a solution for fuel quality traceability and assurance by creating a tamper-proof record of the fuel supply chain, from production to delivery. Blockchain can enable the verification of fuel origin, composition, quantity, and quality at each stage of the process, as well as the compliance with regulatory standards. Blockchain can also facilitate the sharing of information among relevant stakeholders, such as fuel suppliers, testing laboratories, port authorities, ship owners, and insurers, reducing the risks of disputes and claims [2].

Shipment Tracking

Another challenge in the maritime sector is tracking the status and location of shipments across multiple modes of transport and jurisdictions. The current system of shipment documentation is often paper-based, manual, and inefficient, resulting in delays, errors, and increased costs. Moreover, the lack of visibility and transparency in the shipment process can lead to security issues, such as theft, smuggling, and piracy [3].

Blockchain technology can provide a solution for shipment tracking by creating a digital ledger of the shipment events and data, such as origin, destination, carrier, route, time, temperature, humidity, and customs clearance. Blockchain can enable real-time tracking of cargo movements and conditions using sensors and smart devices. Blockchain can also enable the sharing of information among authorized parties, such as shippers, carriers, ports, customs authorities, banks, and insurers, enhancing coordination and collaboration [3].

Smart Bills of Lading

A bill of lading is a document that serves as a receipt, a contract of carriage, and a title of goods for a shipment. It is one of the most important documents in international trade, as it determines the ownership and liability of the goods. However, the current system of issuing and transferring bills of lading is often paper-based,
manual, and slow, resulting in inefficiencies, risks, and costs. For example,
paper bills of lading can be lost, damaged,
forged,
or delayed,
causing disputes
and claims
[4].

Blockchain technology can provide a solution for smart bills
of lading by creating a digital representation
of
the physical document
on
a distributed ledger.
Blockchain can enable
the issuance
and transfer
of bills
of lading electronically,
without
the need
for physical delivery
or intermediaries.
Blockchain can also enable
the verification
of authenticity
and validity
of bills
of lading by using cryptographic signatures
and timestamps.
Blockchain can also enable
the sharing
of information among relevant parties,
such as shippers,
carriers,
consignees,
banks,
and insurers,
improving efficiency
and security [4].

Smart Contracts

A contract is an agreement that defines the rights and obligations of parties involved in a transaction. However,
the current system
of contract execution is often manual,
complex,
and costly,
requiring human intervention
and verification.
Moreover,
the lack
of trust
and transparency in contract enforcement can lead to disputes
and litigation [5].

Blockchain technology can provide a solution for smart contracts by creating self-executing agreements that are encoded on a distributed ledger. Smart contracts can automatically execute predefined actions based on predefined conditions using blockchain data and logic. Smart contracts can also automatically enforce contractual terms and obligations using blockchain mechanisms such as escrow and arbitration. Smart contracts can also enable the sharing of information among relevant parties,
such as shippers,
carriers,
ports,
customs authorities,
banks,
and insurers,
reducing transaction costs
and risks [5].

Conclusion

Blockchain technology is a promising innovation that can digitalize global maritime trade documentation by providing solutions for fuel quality traceability,
shipment tracking,
smart bills
of lading,
and smart contracts.
Blockchain technology can enhance the efficiency,
security,
transparency,
and trust
in maritime trade transactions by creating a distributed ledger system that enables secure
and transparent transactions among multiple parties without intermediaries.
However,
there are also challenges
and barriers to implementing blockchain technology in the maritime sector,
such as technical,
legal,
regulatory,
and organizational issues.
Therefore,
further research
and collaboration among stakeholders are needed to overcome these challenges
and realize the full potential
of blockchain technology in the maritime sector.

References

[1] The British Blockchain Association, “Blockchain for Maritime Trade,” Medium, Nov. 27, 2022. [Online]. Available: https://britblockchain.medium.com/blockchain-for-maritime-trade-7a13608269c9. [Accessed: Jan. 17, 2024].

[2] U.S. Department of Transportation, “Blockchain Use Cases Final Report,” Maritime Administration, Jun. 22, 2020. [Online]. Available: https://www.maritime.dot.gov/sites/marad.dot.gov/files/2020-07/Blockchain%20Use%20Cases%20Final%20Report%20%2820200622%29.pdf. [Accessed: Jan. 17, 2024].

[3] Coin Rivet, “Blockchain at sea: How technology is transforming the maritime industry,” Dec. 10, 2018. [Online]. Available: https://coinrivet.com/blockchain-at-sea-how-technology-is-transforming-the-maritime-industry/. [Accessed: Jan. 17, 2024].

[4] CargoX, “Smart B/L™ – Blockchain-Based Bill of Lading for Global Trade,” [Online]. Available: https://cargox.io/smart-bl/. [Accessed: Jan. 17, 2024].

[5] IBM, “Smart Contracts Explained,” [Online]. Available: https://www.ibm.com/topics/smart-contracts. [Accessed: Jan. 17, 2024].

Order | Check Discount

Tags: Applications of Blockchain Technology in Digitalizing Global Maritime Trade Documentation