The Shipping Logistics Industry in the Hyper-connected Century
Building a New Paradigm of Logistics
New competition in shipping industry to take the lead in block chain platform
In the maritime industry, competition for the introduction of block-chain technology has become fierce. A block chain is a technology that records and replicates all transactions and distributes and maintains information to all network participants. Global shipping companies are transforming into a comprehensive logistics company that manages logistics and transportation processes.
How will the block chain change the logistics system?
When the block chain technology is applied to the shipping industry, it becomes possible to digitize all the documents in the logistics and to have a smart contract in which the processes agreed by the members are processed automatically. Particularly, real-time information sharing enhances visibility, such as location of freight cargo. Also, it is possible to improve the efficiency of logistics by shortening the time required for payment or proof of documents. It can also be used to build trustworthy processes by detecting forgery. With the introduction of block chains, shipping companies can control transportation from reservations to shipment directly without brokers, thus providing a shipping ‘platform’ to the shippers.
Cost reduction of block chain
Introduction of block chain leads to reduction of logistics cost. Assume that goods are transported between East Africa and Europe through maritime trade. Currently, more than 30 individuals and organizations participate in more than 200 transactions and only 10 days to process documents for shipment of goods. According to the World Shipping Council(WSC), the cost of handling shipping documents accounts for one-fifth of the total cost of marine transportation. However, if block-chain technology is applied to shipping and logistics, inefficiency will lead to a 15% increase in international trade and a 4.7% increase in global GDP.(Source : World Economic Forum)
Korea Block Chain Status
Korean shipping companies are also active in introducing block chains. It has already succeeded in applying block chain technology to container cargoes from Busan port to Qingdao and Dalian in China. In addition, Busan Port has also built a service to unify and export container docks based on block chains. Busan Port, the largest port in the Republic of Korea, is the second largest transshipment port in the world, with a total of 16% of total transshipment volume. Therefore, it is essential to share information smoothly between ship operators, transporters and terminal operators. The introduction of this service has improved the inconvenience of transshipment and improved efficiency.