Is blockchain the panacea for the shipping industry..?? Hype vs Reality

blockchain - shipping and freight resourceAhhhh, blockchain..

To many, it’s like entering a parallel universe, evoking images of a world where all processes are in blocks, every block talking to the other, every block working seamlessly at the touch of a button, the equivalent of a human world where the roads are flowing with milk and honey..

There are proponents and opponents to this technology in equal measure, with the proponents fuelling the hype relating to the blockchain technology’s application in shipping, freight and logistics in various media in the recent past..

Is blockchain the panacea for the shipping industry..??

We caught up with John Monarch, CEO of ShipChain in an effort to cut through the hype and understand what the blockchain can and cannot do in the shipping and freight industry, and to help us separate hype from reality..

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SFR: When the whole concept of Blockchain came into being, what was your honest first thought/instinct about it..??

JM: I thought it was novel.  I learned about Bitcoin pretty early. In 2009, due to some friends of mine in the Computer Science department at Clemson – so it was well before any use cases for blockchain had been thought of aside from Bitcoin itself and money.  

It was a great idea – you don’t have to have a bank handle money anymore, you own your own accounts and can send money to anyone you choose without needing a bank as an intermediary.  So I was positive about it from day 1, just hadn’t even thought about further uses.

 

SFR: Since then has your mindset changed about Blockchain..??

JM: Blockchain has significantly gained more concrete support in the last few years, primarily as use cases have developed outside of applications for money. Blockchain is showing itself to be a defining protocol on the internet – we’re able to realize now the Internet of Value now through public blockchains, and can bridge the trust gap that exists today between entities.

 

SFR: There are many theories floating around what blockchain and its uses.. Can you elaborate on what Blockchain can and cannot do for the shipping and freight industry..??

JM: Blockchain is not the cure to everything.  It isn’t going to solve every problem we have.  It won’t stop a truck from getting in an accident, a container from falling off a ship, or a train from derailing.  

That all being said, blockchain is the solution to a lot of the technology woes the supply chain and logistics industry has faced over the years. Traditionally supply chain and logistics entities addressed visibility by piecing together systems that don’t always talk properly, by employing the archaic use of incompatible EDI standards that are a giant headache to use and often have gatekeepers to work with them, all leading to a lack of visibility and a lack of trust between parties.  

The lack of visibility and trust only hurts our end clients, be it retailers, or directly, consumers.  Blockchain can help pull back the curtain, provide a unified layer of visibility, accountability, and trust in a system rather than parties.  

With more visibility naturally comes more efficiency, as you can spot problems sooner and work to prevent them.  Blockchain will be what helps us collaborate to find effective, sustainable solutions to problems rather than everyone pointing fingers at each other when a shipment has an issue.

 

SFR: If the concept of DLT (distributed ledger technology) takes off as you would like it to, how long do you think before all players in the industry can adapt to it..??

JM: We’ve seen high interest in testing and pilot programs, which we see as a positive sign.  We are excited to experience such a swift and high level of interest in a single technology, and the industry has rallied around blockchain with great excitement – but without even knowing the full scope of the applications of blockchain in the supply chain.  

As the scope and use cases become more evident through these pilots, I think adoption will be fast, and by 2022 we will see wide-scale use of blockchain for multiple supply chain functions.

 

ShipChain - Blockchain - Shipping and Freight Resource

 

SFR: Cutting through all the jargon, what, in your opinion is the true use/benefit of using a DLT like Blockchain..??

JM: Trust.  It’s as simple as that.  I can work with 10 different companies in a single shipment without necessarily needing to trust them, as long as I can trust the system. That breeds confidence in supply chain entities to know they are able to effectively do their job.

 

SFR: How affordable do you think technology will be for all users around the world..??

JM: For the adoption of blockchain to happen and take hold in this industry, blockchain needs to have a low barrier to entry.  

Companies that charge hundreds of thousands of dollars simply to talk to them for the opportunity to work on a “private blockchain” (which isn’t indeed a blockchain at all) are risking hurting adoption.  

We’ve open sourced our development quite a bit, and developed the first truly open API that allows for ease of use of blockchain with existing development tools.  You don’t even need to work with ShipChain to use it – it’s publicly out there for free.

We see Open Source and Public Blockchains as the lowest barrier to entry, and therefore the best way to make sure companies large and small are not disenfranchised by prohibitive costs.

 

SFR: Where do I start? What would your recommendations be for shippers and carriers who would like to learn more and see how blockchain may benefit their operation?

JM: My first thought is to seek out any videos you can on explaining blockchain.  As with understanding any skill, you have to start with the basics, and there are some great non-technical ones on YouTube.

It’s good to kind of ‘go down the rabbit hole’ on blockchain and cryptocurrency a bit because even though it may not directly relate to your supply chains, these videos provide a great understanding of what the real underlying system does and why it came to exist.  

There’s no reason to spend a ton of money on consultants and alliances when you don’t even know if the technology is right for your company.  

From there, start digging into how it can impact the supply chain.  I recently gave a talk on why Public Blockchains are indeed the superior technologies for the supply chain and logistics industry – You may find it useful.

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