The logistics processes in the shipping industry are amongst the most complicated, involving stakeholders spread across the world at different junctions of freight movement - thus remaining a system glutted with physical documentation and in need for a technological upheaval. Cross-border trade is now more relevant than ever, as shipping lines keep adding more capacity to their fleet to accommodate the burgeoning growth in international trade. This leads to a fresh infusion of stakeholders in the market, complicating logistics further.
Various maritime management solutions are cropping up in the industry and help connect shippers, maritime carriers, and their affiliated partners, improving efficiency and visibility across the supply chain. Regardless of this, the industry continues to be bogged down by red tape and as the number of parties involved in a single transaction increase, stepping up the need for accountability is vital.
At the crossroads of transparency and efficiency lies blockchain, a technology that if applied right, could revolutionize the way logistics processes are run. FreightWaves spoke with Martin Gnass, Managing Director of IT at Hapag-Lloyd, to get a hold of how the company views the current maritime scenario and the prospects of blockchain in the industry.
“Within shipping, the level of standardization, harmonization of processes, data and documentation is generally low. This causes inefficiencies in the collaboration between carriers and all the stakeholders involved in the shipping supply chain, including customers and vendors. This is the inefficiency that we have to tackle,” said Gnass.
Hapag-Lloyd has generally been critical of companies creating proprietary blockchain solutions in the industry. It is disapproving of, for example, the pilot program that is being tested by Maersk and IBM. Maersk’s solution is expected to not be a standard or a common platform for the maritime industry, but rather serve its own interests - a stand that Hapag-Lloyd is against.
“We have to ensure that once we produce new technologies like blockchain for digital collaboration and secure handling of business documents, it has open interconnectivity,” said Gnass. “We should not have a closed proprietary environment of solutions which would not be able to interlock or connect to each other.”
Gnass insisted that situations that advance a technological monopoly should be actively discouraged, and that initiatives should look to establish an interconnectivity ecosystem based on an open consortium governance model. “We have to ensure that these kinds of digital ecosystems are open for partners and stakeholders to join and has a certain level of openness that influences the stakeholders that have a stake in the governance structure,” he said.
That being said, it is also critical for companies to test the waters by introducing blockchain into the market and perceive the reception the technology has in the industry. “There are currently several projects running, which are still in the early phase. But as far as Proof of Concept (PoC) and validation of pilots are concerned, there are different kinds of use cases and initiatives that are being analyzed,” said Gnass.
Gnass contended that once use cases are validated, it is essential for them to be successfully launched in the industry because the stakeholders would have to connect and be part of an open ecosystem for such a technology to foster.
“I believe it would be reasonable to establish a governance structure like the IATA, which is placed in the airline industry for decades. It could be a role model to be adopted in our industry to simplify the processes, for digital standardizations and improvements with regard to supply chain management and efficiency of the market,” said Gnass.
It is evident from the activity around blockchain that the technology is here to stay. Nonetheless, navigating through regulatory hurdles and getting stakeholders to agree on common standards that would lead blockchain to be adopted mainstream is by far the biggest challenge that awaits it.
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