Its aim is to promote “the efficient, transparent and secure exchange of information in order to foster greater collaboration and trust across the global supply chain” and the most recent addition to its network is the Manila-based terminal operator ICTSI. TradeLens announced on 10 November that it is connecting all of its 31 terminals to the platform, giving them “permissioned access to accurate information on cargo movements well in advance of vessel arrivals.”
Including this latest member, TradeLens says it now has more than 175 organisations, including “more than 10 ocean carriers and encompassing data from more than 600 ports and terminals.” In its first two years, it reckons it has tracked 30M container shipments, 1.5Bn events and roughly 13M published documents.
So this is a good moment to take stock of blockchain’s potential for shipping and assess where it can add value and where it simply adds unnecessary complexity. And can a company unilaterally decide to implement a blockchain approach to its business relationships?
Immutable data storage
First, it is important to know what blockchain is: it is a way of recording data and changes to that data across many storage locations linked as a network. The data is held as ‘blocks’ and the network links them in a chain.
Because of this structure, unauthorised access to one storage location will not yield access to, or change, the underlying data itself. This makes the data ‘immutable’ and thus secure.
Yet one of the highest profile uses of blockchain is to manage cryptocurrency accounts and news stories about thefts from those are alarming. In June this year, for example, the cryptocurrency news service Coindesk reported that $1.5Bn had been stolen in just the first five months of the year.
That might give the impression that blockchain is anything but the safe storage system that its supporters claim but, as ShipInsight reported in October 2019, they would reply that customer carelessness plays a big part in these losses. We quoted cyber security expert Prof David Shrier of the MIT and Oxford University describing to a seminar audience what he called ‘man-in-the-middle’ attacks, in which a hacker gets between the legitimate user and the blockchain database.
“If you have a better lock on your door and you leave the keys lying around, your lock is not going to do anything for you,” he said, and a Forbes report at the time supported his view, describing how thefts have generally followed phishing and other tricks to take over accounts. It is also important to know that blockchains used for currency exchanges are open and public, while those used in the maritime sector are closed systems to which membership is controlled by existing users.
To get a perspective on how blockchain can best be used in the shipping sector, ShipInsight turned to Nick Chubb, managing director of Thetius, which describes itself as “a leading source of research and intelligence on emerging technologies within maritime.”
Any situation in which “you need to record something in a way that is secure is a potential use-case for blockchain,” he said, and his own website includes a brief guide to blockchain in shipping. Yet Thetius itself does not use blockchain. He said this was it was not appropriate for its business model; “we’re an intelligence organisation so nothing we do has to be created in a fashion that would be immutable.”
Don’t do it alone
For other companies considering using blockchain, his advice is that it is difficult to do it alone. Because blockchain’s value comes from the trust that it adds to the information it holds, it implies that this only becomes relevant if a company can share data with others who are blockchain-enabled and can therefore benefit from that added security.
As an example, he said that a company might adopt blockchain to accept payments in Bitcoin, but “how many of its clients are going to want to – or could – pay in Bitcoin?” he said. And for a company that trusts its corporate partners – as Thetius does – the extra trust that blockchain could bring may not be necessary. “It would add a lot of complexity and I would get no value back,” he said.
Its real benefit, then, is in situations where there is no certainty of trust. An example discussed during the 2019 seminar mentioned above involved seafarer certificates, which can be easily forged. A trustworthy way for ship managers to access a database to confirm immediately that a certificate being offered by a job candidate is genuine would be an obvious benefit for the manager and improve safety onboard.
Speaking to ShipInsight during that event, the Nautical Institute’s director of projects, David Patraiko, said that “blockchain has the potential of addressing some of our industry’s big challenges for trustworthy certificates, effective documentation, fatigue and cyber security.” Mr Chubb agreed. “Seafarer certificates are probably one of the best examples [of blockchain use] because the level of trust that exists [in them] is very, very low.”
One of the speakers at the 2019 seminar was Anjaney Borwankar, co-founder and CEO of Singapore-based blockchain specialist Navozyme and for this article he told ShipInsight that, following a demonstration of ‘Blockchain Enabled E-Certificates’ in late 2019 to the Maritime Industry Authority of the Philippines and the Maritime Academy of Asia and the Pacific (MAAP), “we understand that budgets have been allocated by the Philippines Government for a blockchain enabled certification system.” However, “due to Covid-19, the initiative has got delayed and we are awaiting to reboot this initiative.”
He described BEEs as “real time dynamic assets generated in real-time via the data coming from authenticated sources.” Seafarers would be able to receive their certificate credentials on their mobiles, with “all the required verification checks carried out at the backend via the blockchain system.”
Ship registration is another area that would benefit from blockchain, Mr Chubb suggested, and referred to a project ShipInsight reported in October 2019 in which a consortium of the Singapore Shipping Association (SSA), the International Chamber of Commerce and a Singapore tech startup Perlin were developing a blockchain-based ship registration preparation system, called the International E-Registry of Ships (IERS).
ShipInsight is not aware of subsequent developments in that project and the SSA and Perlin did not respond to invitations to contribute to this article.
Meanwhile, another Singapore scheme, the Blockchain Registry Alliance for Vessels (BRAV), has been making progress. It is supported by Singapore’s Maritime and Port Authority (MPA) and led jointly by Navozyme, Maersk Drilling and ABS. The Danish Maritime Authority has also joined BRAV earlier this year as an observer.
Mr Borwankar told ShipInsight that, based on this project, “the blockchain enabled ship registry process has been demonstrated”.
This appears to mark a significant shift for the MPA. In notes prepared for its 2019 call for proposals to its Maritime Innovation and Technology Fund and since posted on its website, it reported that, although it is “open to working with others and exploring blockchain”, it had “seen different technologies … that have unfortunately not been fit for purpose.”
Mr Chubb views blockchain’s move into ship registration as a significant development, saying that this would give a register a fully verifiable record of a ship and its history. If similar schemes were used by all registers, it would effectively create a decentralised trusted source of information about a ship, which would be valuable during ship sales or by authorities such as flag and port state inspectors.
Mr Borwankar also mentioned another of its blockchain solutions, the Navozyme-Vessel Registry Platform – which is designed to support the process of registering new builds, vessel sales and purchases and delisting vessels that are ready to be recycled. He said this had been recently demonstrated at an SSA event attended by “all the region’s shipowners.”
Bunker blockchain hit by COVID-19
Bunker transactions are another area of business where trusted data would be useful, Mr Chubb said, and referred to a technology launched in October 2019 by BunkerTrace. In use, this would track the presence of unique tracers that are added to the fuel at every stage of its supply chain and record each transaction in a blockchain-based system.
This could provide “an immutable audit trail that can be easily verified with a test on board prior to loading,” the company’s website states, allowing operators and managers “to make an informed decision about whether to proceed with onboarding fuel.”
Its website includes two pre-launch case studies and a link to a media report saying that the dry cargo operator Marfin Management was planning to use the system – which ShipInsight understands followed a successful trial in late 2019 – but no further contracts have followed.
But its co-founder, Deanna MacDonald, remains positive. She reminded ShipInsight that, across the industry, “major testing and compliance enforcement plans have been disrupted, delayed or even suspended” because of the COVID-19 pandemic and said that BunkerTrace is “ensuring Marfin’s vessels are compliant with IMO 2020, while driving efficiency of their bunkering process.”
She said BunkerTrace has continued to build on its synthetic DNA and blockchain-based solutions and that it is exploring how its technology “can enhance remote inspection processes … as inspection teams are now less able to board vessels physically.”
Port operations form another area that appears ripe for blockchain applications and Mr Borwankar mentioned a project Navozyme is involved in, alongside the port authorities of Barcelona and Tenerife and with the support of the environmental services provider TradeBe, shipping agency Alfaship and the Spain’s port state control organisation Capitania Maritima.
This will streamline port clearance and MARPOL documentation processes with blockchain, he said, adding that trials in the two ports have already been conducted “and the impact assessment we measured is promising.” In light of those results, “we are all preparing for commercial rollout from Q1 2021.”
Despite these specific applications, the lack of more widespread blockchain use appears to reveal inertia in the industry that is holding back its introduction, which Mr Chubb acknowledged. Unless there is a clear benefit to switching to blockchain, the obstacles to it are “almost insurmountable”, he said. “The pain of change” from replacing an existing process with a blockchain alternative has to be worth it, he went on. “It works best when there is a system that is just not functioning very well because of a lack of trust.”
That is why TradeLens has succeeded. Mr Chubb singled it out as probably the biggest success for blockchain because it brings together many players across the entire logistics chain who are “streamlining their own internal processes by having data available to them.”
On its website, TradeLens echoes that idea of streamlining by comparing “the single direct line of sight” journey made by an item bought from an online retailer with a typical international shipment, which “could be connected to as many as 30 independent parties and 100 people, generating up to 200 exchanges of information.” But TradeLens, it says, gives “a single line of sight across all supply chain activities.”
It is a form of words that implies simplicity and, despite the technology’s currently slow uptake, Mr Chubb predicted that, in 10-15 years, blockchain will be used “anywhere there’s a transaction or a change of ownership” and most customers will not notice the transformation. “It is a genuinely transformative technology,” he said.