Kuehne + Nagel looks to blockchain for its container weighing needs

Blockchain finds use case for hand-off of weight data on containers.

Kuehne + Nagel say it’s using blockchain to ease sharing of weight data for ocean shipping containers.

The Swiss freight forwarding giant says “blockchain technology” has been applied to its verified gross mass (VGM) portal.

The move “allows for using native blockchain interfaces for data exchange with third parties, removing the need for additional off-chain communication channels,” the company said.

Kuehne + Nagel says it is recording 800,000 transactions through its blockchain-enabled VGM portal.

The International Maritime Organisation, the main regulatory body for shipping, introduced VGM just over two years ago. The rule requires that the weight of loaded containers must be verified before being placed on a ship.

It was put into effect after several marine accidents were believed to have stemmed from mislabeled container weights and cargo shifting during voyages.

In 2013, the Mitsui O.S.K. Lines-owned MOL Comfort suffered a crack that eventually led to a fire and the ship’s sinking, along with the loss of over 4,000 containers. Container weights were said to have been a factor in the casualty.

Blockchain’s use in the maritime supply chain is an area of growing interest and hype.

Maersk and IBM made a splash this summer by unveiling TradeLens, a blockchain initiative to reduce the many paper-based transactions involved in container shipping. France’s CMA CGM and Korea’s Hyundai Merchant Marine have also tested blockchain’s use in container shipping.

But actual usage of blockchain is still rare as ocean shipping tries to find applications for its use, says Martin Kolbe, chief Information Officer for Kuehne + Nagel,

“The list of promises related to the use of blockchain in the logistics industry is long, but actual real-world applications are hard to find,” Kolbe said. He says the blockchain-enabled VGM portal “allows us to get a true hands-on experience with blockchain technology in an on-premise production environment and with a high number of transactions.”

The VGM rule might be a perfect testbed for blockchain. Indeed, the introduction of VGM was fraught with challenges for how to accurately transmit data between the various parties that can touch an ocean container.

As originally written, the IMO says the shipper can tell the ocean carrier directly a container’s weight or the shipper can tell the marine terminal, which then has to transmit the verified weight to the ship in port.

The shipper can either weigh the loaded container or add the weight of items in the container to the container’s weight.

But many shippers complained about the difficulty of weighing containers and the logistical challenge of transmitting those weights to ocean carriers.

Many shippers complained about the fees ranging from $15 to $25 per container that freight forwarders charged for implementing VGM rules. Cargo owners were also concerned that marine terminals would charge yet another fee for certifying the VGM.

In June 2016, the Federal Maritime Commission says certifying the VGM should be the responsibility of the terminal operator, who them sends data to the shipping line.