Role of Blockchain in the Digital Transformation of the Global logistics and shipping industry

The recent announcement that the Royal Malaysian Customs Department (RMCD) has joined the Tradelens initiative has triggered a lot of interest in the application of blockchain in the logistics and supply chain industry in Malaysia. This article intends to shine more light on the many benefits and value that blockchain can bring to the industry, with particular emphasis on the TradeLens technology.

Blockchain is a permissioned network of trusted participants who are using the platform to record transactions in hyperledger fabric to form a smart contract. It’s a single view of all transactions that are submitted and updated by network participants whose identities are made known to each other using encrypted certificates. Data and Transactions recorded, dated and signed in the ledger are tamper proof, non-repudiable and traceable. Data is only shared with those who need to know.

TradeLens is a collaboration between IBM and Maersk to provide a blockchain based and open-API platform to enable the digital transformation of the global container logistics industry. It provides end-to-end visibility of shipment between buyers and sellers. TradeLens participants involve freight forwarders and 3rd party logistics providers who create consignments upon request by owner of goods. The logistics providers will use the Bill of Lading as a contractual agreement with the owner of goods for transportation of cargo from warehouse to ports at the country of origin and similar arrangement when the goods arrive at the destination.

Ports, terminals, custom authorities and some government agencies are also participants of this network. Authorized users of the network are given access to create, edit, update and query data and transactions in the ledger via services in the form of publicly available APIs. New shipping events and transaction updates are published to subscribers who want to receive an alert or notification via the pub/sub event framework. Typical trade documents such as Bills of Lading, custom declarations, certificates, shipping manifests, etc are uploaded or downloaded by authorized users of the platform.

The blockchain enabled Digital Data is considered to be secure and tamper-proof. Shipment status are tracked to provide end to end visibility of cargo shipment journey from warehouse to ports, from ports to ocean liners and from ports of arrival to warehouse.

When custom authorities sign up as participants in this network, they have access to shipment data and events for inspection of goods stored in physical shipment containers during custom clearance. Digitizing goods inspection process can help to improve risk management and increase transparency in detecting forgery and fraud during inspection for custom clearance. Potential use cases of digitizing inspection at customs are automating and streamlining approval of green lane clearance using pre-defined local rules, policies and regulations maintained in a rules repository where its life-cycle is managed and governed, allowing for frequent changes and updates to the rules. Suspicious goods are flagged for exception handling through case management to expedite decision making while the shipment release is put on hold. 

With the digitalization of logistics data, further value can be extracted through hyperautomation. Platforms such as IBM Cloud Pak for Automation can unlock data in documents to start workflow for transaction processing using secure and trusted data. The straight through processing with full visibility into process and status will further increase efficiency of business operations in the shipping industry. The efficiency improvement allows re-deployment of workers from menial work such as paper handling to higher value-added activities.

This article serves as a brief introduction to the application of blockchain and the many benefits that the technology brings to the global logistics and shipping industry. Additional comments and viewpoints are welcome.

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