Blockchain in transport and logistics. See how the TradeLens platform helps freight forwarders, logisticians and customs officers.

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Blockchain in transport and logistics. See how the TradeLens platform helps freight forwarders, logisticians and customs officers.

One of the tasks of TradeLens is to ensure better ‘visibility’ of the supply chain. The platform created by the IT giant IBM and the shipping giant Maersk is of open type. It covers the entire supply chain and is constantly updated and verified by every network user.

We believe that blockchain can play an important role, for example in the digitalization of global shipping, an economic area that transfers four trillion dollars of goods annually,” said Bridget van Kralingen, vice president of IBM Global Industries, Solutions and Blockchain.

TradeLens is used by several dozen port operators, many institutions providing customs services, logistic companies and even competing for ocean carriers. It covers several dozen port and terminal operators. These include PSA Singapore, International Container Terminal Services Inc, Patrick Terminals, Pacific International Lines, modern Hong Kong terminals, Port of Halifax, Port of Bilbao, Port of Philadelphia, Hamburg Süd – a total of almost a quarter of a thousand ‘sea gates’ around the world. There are also customs agents, such as Ransa and Güler & Dinamik, as well as freight forwarders, transport and logistics companies, including Agility, CEVA Logistics, DAMCO, Kotahi, PLH Trucking Company, Ancotrans and WorldWide Alliance.

How does blockchain work?

TradeLens uses blockchain technology as the basis for digital supply chains. Freight forwarders, shipping lines, port and terminal operators, inland waterway transport and customs authorities can interact more effectively through real-time access to transport data, including documents, and more specifically to what is related to the Internet of Things, namely sensor data (from temperature control to container weight). Blockchain in this context is a kind of a collective accounting book of transactions, but in a digital form, scattered throughout the whole network. Everything is done in accordance with the principles of confidentiality and data privacy.

Any computer on the network can participate in the transmission and authentication of individual transactions. This transaction book is, on the one hand, open to all and, on the other hand, secured against unauthorized access by means of cryptographic tools.

Specialists ensure that the chain of blocks acting as the accounting book of the transaction with the current technology and computing power of computers cannot be counterfeited. In the event that someone tries to cheat, alter or enter an unauthorized transaction, blockchain nodes in the process of verification and reconciliation will discover that one copy of the book contains a transaction that is inconsistent with the network records and will refuse to include it in the chain of blocks.

Resistant to counterfeiting and all kinds of manipulation are not only the data itself but also the transactions and their sequence.

Users can only view their transactions. Thanks to this, transactions are only available under user access rights, and their entire history, from the beginning of blockchain to the present, can be reviewed and verified.

TradeLens prevents errors and delays

TradeLens is therefore tasked with enabling digital cooperation between multiple parties involved in international trade. The Commercial Document Module, called ClearWay, enables importers/exporters, customs agents, customs offices, and other government agencies and NGOs to collaborate in business processes and exchange information.

During the one-year trial period, Maersk and IBM worked with dozens of partners to identify ways to prevent delays caused by documentation errors, delays in reporting and other difficulties. Supply chain participants estimate that through better visibility and more efficient means of communication, they can also gain full knowledge of, for example, the stage at which their shipments and containers are at.

To date, more than 150 million shipments have been tracked on the platform, including data such as the time of arrival of ships and ‘entry’ containers and documents such as customs clearance, commercial invoices and bills of lading, of which there are about 0.5 million new daily. One example showed how to reduce the time it takes to ship packaging material to a production line in the United States (by 40%), while ‘by the way’ significantly reducing the cost of the entire operation. This technology was also used to reduce documentation handling and shipping costs from China (delivery handled by Pacific International Lines using an electronic version of the bill of lading, a necessary commercial document, processed on the blockchain), and to import a significant amount of mandarins to Singapore before the Chinese New Year. 

Platform participants can track critical data about each shipment in the supply chain.

TradeLens uses blockchain technology to create an industry standard for secure digitalization and transmission of supply chain documents worldwide,” comments Peter Levesque, CEO of Modern Terminals.

Canadian customs officers improve the quality of trade data

The number of users is growing. One of the first border agencies to join the platform is the CBSA (Canadian Border Services Agency). It decided to launch a TradeLens pilot project to facilitate the transfer of people and trade on the busy Canadian border, where more than 58,500 documents, 14,500 trucks, about 240,000 mail and 127,000 courier shipments are processed daily. It is about checking how blockchain can improve the quality and timeliness of commercial data, increase the visibility of cargo movement at the first port of arrival and reduce the number of transactions necessary to make a decision to exempt a shipment.

“TradeLens can create a single, trusted, digital supply chain for all shipments entering Canada. The TradeLens pilot project gives us the opportunity not only to obtain analytical information but also to improve the ability to provide data, accuracy and targeting. The end result can be a faster and more reliable domestic supply chain,” says John Ossowski, President, CBSA.

The platform makes port formalities simpler

In addition to the CBSA, the Port of Montreal is also working more and more actively with the platform, making important transactions securely available through real-time access to shipping data and shipping documents. The platform was also joined in October 2018 by the Port of Valencia, Spain, with plans to develop a smart port based on blockchain and big data technology. According to Jose Garcia De La Guia, who is responsible for implementing new technologies, blockchain-based systems can improve supply chain logistics on a global scale and thus simplify port formalities. This is confirmed by the operators of the port of Rotterdam. The key for them is that the platform gives them quick access to data and documents.

It is also increasingly being said that the pilot version of the platform will be used by the second largest port in Russia, St. Petersburg. The Ministry, as well as the companies with capital investments in the port of St. Petersburg, are counting on TradeLens to reduce formalities through intelligent contracts and the combination of traders, transport companies and forwarders through a decentralized network. Experts estimate that the use of blockchain technology can reduce real operating costs by more than 10 billion roubles (almost 153 million dollars). According to ‘Kommersant’ journalists, the pilot project is to start in the second half of 2019. Unofficially, it is also said that other Russian companies (e.g. Infotech Baltika) intend to create their own blockchain system (in a way modelled on TradeLens) for 14 ports.

Photo: Wikimedia Commons

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