For years now, the hype around blockchain and distributed ledger technology (DLT) has been endlessly stoked. With everything from accurately tracking cargo, to expediting ships registry and customs paperwork, we have been inundated with a seemingly endless list of solutions for logistics and shipping. Integrating with these highly secure and verifiable platforms could offer significant cost-savings while potentially ushering in a new era of efficiency and trust. Yet, despite the dreams of blockchain innovators, the technology still has some significant obstacles before the global maritime industry can adopt it.
As is often the issue with modern innovation, there are many startups and competitors, all furiously working away trying to create a useful product. Innovative independence can fuel creativity, but it can also hinder implementation. Looking outside the maritime sector, the complex nature of the technology has resulted in not one or two, but dozens of different blockchain protocols such as Ethereum, Hyperledger, and the infamous Bitcoin. It is important to understand that these blockchain protocols have developed separately and do not communicate well. If stakeholders use competing blockchains with different data standards, they’ll most certainly run into issues between applications. Not unlike the compatibility between a Microsoft computer and a Macbook, the code and design can be very different. Data between the two must be defined and standardized for them to communicate effectively.
If you’ve read this far and aren’t equipped with the basic concept of what blockchain is, that’s ok, you can read about it here. Blockchain is often described as digital trust, and at its root, it’s simply a highly secure digital ledger to which information can be added but not easily altered. Because of the technology’s decentralized nature, data is not stored in a single location but distributed across multiple computers and virtually chained together within its “blocks.” The information throughout the chain is heavily encrypted but can be accessed easily by any involved party.
Standalone, blockchain, is a proven technology. It’s been thoroughly tested and successfully used independently. The issue lies in its application. When it comes to the sheer size of the maritime industry, the chain of custody, and the number of parties involved in shipping and logistics, it’s easy to understand its complexities. Just as a region may use metric or standard measurements or a customer may place an order in Spanish or Mandarin, it is unrealistic to expect all parties, regions, and application areas to use the same blockchain protocol.
Blockchain is applicable anywhere multiple parties are using the same set of data, particularly if that information is critical for operations (think oil cargo transfer), of immense value (employee bankroll), or repetitive and straightforward (like customs forms and administrative work). Essentially, it’s the record and use of data. iPhones and Androids may rely on different operating systems, but you can still send and receive messages between the two. Because there is a set data standard, the two systems are interoperable and can communicate. It is this concept which the blockchain industry so desperately needs to adopt in order to integrate with industry. Before any new technology like blockchain or DLT can possibly be implemented industrywide, there must be data standards and a framework to work within.
Recently, there has been a major push to establish just that. If the industry worked with a common data standard for information used and applied, it could smooth out the hurdles of implementation. Uniformly defining what data is collected and organized will serve as building blocks for implementation and interoperability of distributed ledger technologies.
Recognizing the need for standardization, a handful of organizations have moved to the forefront of the subject. The International Standards Organization (ISO), known for establishing standard terms for all aspects of industry from bolt and nut tolerance to cloud computing, has already published two blockchain standards, with eight more under development. These standards define broad topic areas like legally binding smart contracts, security management, and governance, but don’t cover specific use cases. But the ISO is just one of many defining parties. Other organizations with more specialized expertise, such as Trust Over IP Foundation (ToIP) have been diligently working to establish such frameworks. ToIP has already created several standards for technical interoperability of digital credentials and currencies, alongside policy interoperability for the governance framework of legal requirements and business needs.
Recognizing the unique situation of the maritime industry is Blockchain in Transport Alliance (BiTA), founded in 2017. Nearly 500 companies, including BP, Gemini Shippers Group, and APL Logistics, have teamed up under BiTA, becoming the world’s largest blockchain alliance. In collaboration with its members, BiTA has been working to create royalty-free standards applicable to the entire shipping and logistics industry.
Notably, BiTA is involved with several proof-of-concept projects, such as with the Port of Miami. Testing its blockchain data standards while moving cargo throughout multimodal shipping, they used blockchain to eliminate time spent on the paperwork that would otherwise be handled manually, such as bills of lading, custodial documents, and customs declarations. BiTA has also worked in collaboration with the Associated British Ports through its member Marine Transport International. As one of Europe’s first major tests of the technology, they’ve worked to identify opportunities for blockchain to provide transparency and efficiency within the supply chain between ports.
With membership steadily increasing, BiTA is at the forefront of collaborative innovation and implementation for the industry. In 2019, BiTA published its first set of industry-specific standards for location components: BiTA Std 120-2019. With more to come, such a framework will allow for the interoperability between any DLT blockchain application, protocol, or platform, a shipping logistics business chooses to leverage.
The continued development of such standards is essential to the interoperability of the many blockchain protocols and use cases. Without further progress, collaboration, and implementation, the technology will be nothing but hype with zero applicable use.
While the era of blockchain may be near at hand, there is still much work to be done before the vast global industry of maritime shipping can embrace such change. The facts remain, innovation has outpaced the solutions it provides, and a solid foundation must be made before reaping its rewards. Fortunately, the technologists behind this revolution are teaming up with industry to create an environment where blockchain can work, finally capitalizing on its untapped potential.
Patrick is a Technology Analyst at Thetius and a maritime officer with experience aboard a variety of commercial sea-going vessels. Patrick is a graduate of Maine Maritime Academy and holds a Bachelor of Science in Marine Vessel Operations & Technology, he closely follows new technology developments and the future of the Maritime Industry.