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A Review of Blockchain Technology Implementation in Shipping Industry

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140 Scientific Journal of Maritime Research 33 (2019) 140-148 © Faculty of Maritime Studies Rijeka, 2019

Multidisciplinary Multidisciplinarni
SCIENTIFIC JOURNAL znanstveni časopis
OF MARITIME RESEARCH POMORSTVO

https://doi.org/10.31217/p.33.2.3

A Review of Blockchain Technology Implementation in Shipping

Industry
Marija Jović1, Marko Filipović2, Edvard Tijan1, Mladen Jardas1
1
University of Rijeka, Faculty of Maritime Studies, Studentska 2, 51000 Rijeka, Croatia, e-mail: [email protected]; [email protected]; [email protected]
2
Ul. Braće Cetina 2, 51000 Rijeka, Croatia, e-mail: [email protected]

ABSTRACT A RT I C L E I N F O

This article presents a comprehensive review of the current and rising trends of blockchain Review article
technology usage in shipping industry. The definition and features of blockchain technology are Received 13 May 2019
provided, as well as the potential usage of blockchain technology in various areas (financial services, Accepted 6 September 2019
Internet of Things, medicine, government, etc.), in order to better understand its complexity and
application. Furthermore, the major challenges of blockchain technology are shown, and the most Key words:
prominent examples of blockchain applications in shipping industry are provided. The application Blockchain technology
and advantages of blockchain technology in seaports are demonstrated through several examples. Shipping industry
Seaports

1 Introduction addition to increased transparency and security achieved

through blockchain, it is possible to speed up the physi-
Maritime transport has been the main mode of trans- cal flow of goods (Lindman, Rossi and Tuunainen, 2017).
port for global trade over the past centuries and one of the For example, Maersk and IBM have decided to jointly build
cornerstones of globalization (Halim et al., 2018). Around their own blockchain solution and the goals are to reduce
90% of world trading is carried out by the shipping indus- the cost of global shipping, improving of visibility across
try (IMO (International Maritime Organization), 2019).
supply chains and elimination inefficiencies stemming
Maritime transportation plays a significant role in the in-
from paper-based processes (IBM, 2018).
tegrated transportation system, especially in international
trade system (Caban, Ignaciuk and Misztal, 2017). This  paper  researches  the applications of  blockchain
technology with special emphasis on blockchain technol-
Blockchain as a relatively new technology can posi-
ogy in maritime transport, providing a better understand-
tively affect to maritime transport and it can bring many
innovative changes to outmoded industry as it is today. ing of blockchain technology role in maritime transport
The blockchain is a digital, decentralized and distribut- sector. The research problem stems from increased costs
ed ledger in which transactions are logged and added in and lost time due to the archaic or inadequate execution
chronological order with the goal of creating permanent and monitoring of business processes.
and tamper-proof records (Treiblmaier, 2019). Blockchain The goal of the research is to present the impact of
is designed to achieve decentralization, real-time peer- blockchain technology on maritime transport develop-
to-peer operation, anonymity, transparency, irrevers- ment, as well as to demonstrate the possibilities of using
ibility and integrity in a widely applicable manner (Tijan, blockchain in shipping industry. The research has been
Aksentijević, et al., 2019). conducted in connection with Activity D3.1.1 of DigLogs
Furthermore, it can positively affect maritime trans- project “Collection of the main disruptive innovations that
port as well as all logistic processes, from storage to de- could affect the area in the next five years”. The DigLogs
livery and payment (Tijan, Aksentijević, et al., 2019). In project involves cooperation between the two countries –
M. Jović et al. / Scientific Journal of Maritime Research 33 (2019) 140-148 141

Italy and Croatia, and is being implemented with the aim operational risk in financial market, risk management,
of creating the necessary concepts, technological solu- Internet of Things (IoT) to public and social services
tions, models and planning to establish the most advanced (Tijan, Aksentijević, et al., 2019). IoT technology may be
digitized logistic processes for multimodal freight traffic improved by blockchain technologies. The Internet of
and passenger services in the program area. Things represents the digital, or “smart” connection of
objects using RFID sensors, Wi-Fi, Bluetooth and other
“smart” protocols in order to accelerate business proc-
2 Blockchain technology
esses (Jović et al., 2019). The typical applications of IoT
The blockchain technology is based on a method where include logistics management with Radio-Frequency
previously unknown parties can jointly generate and Identification (RFID) technology, smart homes, e-health,
maintain practically any database on a fully distributed smart grids, the maritime industry, etc (Tijan, Aksentijević,
basis where transaction correctness and completeness et al., 2019).
are validated using consensus of independent verifiers There is a difference between blockchain and other
(Tijan, Aksentijević, et al., 2019). Blockchain consists of smart technologies. For example, Blockchain is designed
two terms: the “block” and the “chain”. “Block” represents as a basis for applications that involve transaction and
transactions, while “chain” links these transactions into interactions. These can include smart contracts (smart
one chain. Block is the basic blockchain unit. Each block contracts are automatically carried out when a specific
contains a list of transactions and links to the previous condition is met, for instance regarding the conditions of
block in the chain. The principle of blockchain technology goods or environmental conditions) or other smart appli-
is accomplished through a decentralized peer-to-peer net- cations that support specific Internet of Things processes.
work. The peer-to-peer network is defined as a data shar- In this way, blockchain technology can improve not just
ing network between many working units (Peer-to-peer compliance in the IoT but also IoT features and cost-effi-
mreže, 2009). ciency (i-SCOOP, 2018).
The first blockchain was used as a basis for Bitcoin
cryptocurrency in the financial sector. Bitcoin uses peer- 3 Blockchain challenges
to-peer technology, and it operates without any trusted
third-party authority that may appear as a bank, a char- Blockchain technology is still very immature, there is
tered accountant, a notary, or any other centralized no single underlying standard, concepts are difficult to be
service (Maersk and IBM to Form Joint Venture Applying mastered and there is need for programming interven-
Blockchain to Improve Global Trade and Digitize Supply tion even in the simplest forms of implementation (Tijan,
Chains, 2018)���������������������������������������������
.  Bitcoin is open-source; its design is pub- Aksentijević, et al., 2019). Furthermore, lack of regulation
lic, nobody owns or controls (Bitcoin, 2019). Moreover, it creates insecurity, because some facets of smart contract
is a cryptographically secure electronic payment system, technology might be adopted by the logistics market,
and it enables transactions involving virtual currency in just to be overregulated, or even to be considered illegal
the form of digital tokens called Bitcoin (BTC or bitcoins) (Gatteschi et al., 2018).
(Conti et al., 2018). In the shipping industry, blockchain Blockchain technology suffers from scalability and
was initially used to enable confidential financial transac- performance issues: all nodes in the chain must process
tions between the stakeholders, without relying on “third all transactions, and this presents an issue with large and
parties”. However, there is a difference between public especially global scale roll-outs (Tijan, Aksentijević, et al.,
blockchain networks, and solutions which are present 2019)��������������������������������������������������
. Therefore, “the technology is very energy inten-
in shipping industry. Public blockchain allow anyone to sive, and proof calculations expend significant amounts of
join, no one has control over the networks etc. (Public Vs processor power. Furthermore, users’ privacy might be re-
Private Blockchain In A Nutshell, 2018), while the last are duced, because all nodes contain a full copy of the ledger,
typically based on permissioned blockchains which have and there is no central authority to contact in case of evi-
very different properties and are much more similar to dent security breach” (Tijan, Aksentijević, et al., 2019).
traditional information systems or database. Distributed trust and therefore security and privacy
Blockchain-based smart contract represents a distrib- are at the core of the blockchain technologies, and have
uted operating system (Uvod u blockchain — Ethereum i the potential to either make them a success or cause them
pametni ugovori – startit, 2017). A smart contract can be to fail (Karame
��������������������������������������������������
and Capkun, 2018)�������������������������
. Personal data, and sen-
defined as a self-executing pre-evaluated contract (Allam, sitive data in general, should not be trusted in the hands
2019). A smart contract aims to digitally facilitate, verify, of third-parties, where they are susceptible to attacks
or enforce the negotiation or performance of a contract and misuse (Zyskind, Nathan and Sandy’ Pentland, 2015).
(Mourouzis and Tandon, 2019). Blockchain technology Instead, users should own and control their data without
includes several preventive mechanisms (e.g., distributed compromising security or limiting companies’ and author-
consensus and cryptography) to reduce risks of cyber- ities’ ability to provide personalized services. One of the
attacks. Blockchain can be applied in diverse applications solutions is a platform which will combine a blockchain,
from financial assets, payment systems, smart contracts, re-purposed as an access-control moderator, with an off-
142 M. Jović et al. / Scientific Journal of Maritime Research 33 (2019) 140-148

blockchain storage solution (Laurent et al., 2018). Users

do not have to trust third parties and are always aware of
the data that is being collected about them and how it is
used. In addition, the blockchain recognizes the users as
the owners of their personal data. Companies, in turn, can
focus on utilizing data without being overly concerned
about properly securing and compartmentalizing them.
The Deloitte US and global blockchain practices com-
missioned the survey “Deloitte’s 2018 global blockchain
survey” in March and April 2018, primarily as a research
vehicle to gain greater insights into the overall attitudes
and investments in blockchain as a technology (Deloitte,
2018). Despite the aforementioned challenges regarding
the security, according to the survey, the majority of re-
spondents (1053 globally) believe that blockchain is more
secure than conventional IT systems.

4 The application of blockchain technology in

shipping industry
The maritime industry is part of a complex and infor-
mation-intensive maritime supply chain comprising a set
of organizations that are globally connected and distrib-
uted, including other critical infrastructures that sup-
port world trade, such as transport and port structures
(Gausdal, Czachorowski and Solesvik, 2018)�����������
. The mari- Figure 1 Maersk and IBM blockchain solution for digitalizing
global trade (IBM- Blockchain, 2018)
time industry lacks innovations related to operations pro-
cedures and logistics, and one of the most promising areas
of maritime innovation is related to digitalization, includ- The processes involving international shipments
ing the development of smart ships, smart fleet and smart of goods by sea are complex since they involve a large
global logistics (Tijan, Aksentijević, et al., 2019), (Wang et number of organisations and people, including a network
al., 2016). of shippers, freight forwarders, ocean carriers, ports, and
Although the maritime industry is technologically ad- customs authorities. With the ability to monitor the cargo,
vanced, innovations in the maritime sector have been the platform will reduce the need for documentation, and
primarily related to ship construction and propulsion, automated paperwork will enable safe sending and sign-
oil and gas exploration, seabed exploitation technolo- ing of contracts using blockchain technology. Blockchain-
gies, and other—mainly engineering-based—innovations based smart contract will have a significant role in the
(Tijan, Aksentijević, et al., 2019). The following are some Maersk platform as it enables managing approvals, faster
of the most prominent examples of blockchain applica- processing of information compared to the current system,
tions in maritime industry, with the emphasis on maritime and the number of errors will be reduced to zero (Shipping
transport. Blockchain: Maersk Spin-Off Aims to Commercialize Trade
Platform – CoinDesk, 2018).
TradeLens – Maersk and IBM blockchain
BDTS – CargoX
Maersk and IBM joined together in order to develop a
blockchain solution aimed at digitalizing global trade, and CargoX developed a BDTS platform (Blockchain Docu­
they called it “Tradelens”. Furthermore, inspired by this in- mentation Transaction System). BDTS presents a platform
itiative, other established industry actors have also begun with many applications where Smart B/L™ is the most
to form their own partnerships or to join industry wide popular one. CargoX is the independent supplier of block-
consortiums hoping to reach the promised benefits of chain documentation transaction system which provide an
blockchain technology. According to IBM, the joint block- extremely fast, safe, reliable, and cost-effective way to proc-
chain initiative had the potential to “vastly reduce the ess shipping documents anywhere in the world (CargoX |
cost and complexity of trading” (Maersk and IBM Unveil Reshaping the Future of Global Trade with the World’s First
First Industry-Wide Cross-Border Supply Chain Solution on Blockchain Bill of Lading, 2019). CargoX has created an open
Blockchain, 2017). Figure 1 shows the Maersk and IBM system based on blockchain technology and encrypted de-
blockchain solution for digitalizing global trade (IBM- centralized data storage that will enable the creation and
Blockchain, 2018). exchange of traffic-related documents by smart contracts.
M. Jović et al. / Scientific Journal of Maritime Research 33 (2019) 140-148 143

Figure 2 Comparison between paper solution and CargoX digital solution (From the Past to the Future, 2019)

With������������������������������������������������������
Smart B/L ������������������������������������������
application�������������������������������
, CargoX aims to substitute to- requires the deployment of blockchain technology, which is
day’s physical (paper based) proof of ownership (used to based on the entire information delivery chain to the end
prove ownership of the cargo at the destination port) with user – from the moment the product leaves the factory, field
the digital proof of ownership, making the Bill of Lading saf- etc. – to the receiving customer via a “trust less” system and
er, immediately portable, easier to archive and much cheap- transparent blockchain contracts (ShipChain: The Logistics
er than the current Bill of Lading in paper form. Figure 2 Platform Powered by Blockchain, 2018).
shows the comparison between current work flow and With the support of the ShipChain platform, there will
work flow provided from CargoX Smart B/L™ blockchain be a possibility of monitoring cargo and status points
based solution for transferring documents in less than 20 globally, i.e. on all geographic points. Each point will be
seconds (From the Past to the Future, 2019). encrypted and available for interpreting and only in-
CargoX aims to connect issuers, carriers, importers, volved stakeholders will see all the cargo data. Carriers
exporters and other stakeholders in a balanced system will have more visibility through their supply chain and
based on trust and interaction. In this respect, CargoX’s will communicate easily. Information on loads, geo-
goal is to eliminate the need for an intermediary by pro- graphic points, and basic compliance information will be
viding tools for secure document sharing, significantly re- recorded and publicly validated within the “sidechain”
ducing costs and time of delivery by offering a high level of (S&R-Shipchain-Outline Content Breakdown, 2017).
security and transparency. A sidechain is a separate blockchain that is attached to
Port of Koper presents a good example of successful its parent blockchain using a two-way peg (What are
implementation of blockchain technology. In August 2018, Sidechains? – Hacker Noon, 2018)����������������������
. The two-way peg ena-
the first ever container processed with the revolutionary bles interchangeability of assets at a predetermined rate
new blockchain-based CargoX Smart Bill of Lading™ was between the parent blockchain and the sidechain (What
released in the aforementioned port. The Bill of Lading for are Sidechains? – Hacker Noon, 2018). The contract will be
this shipment has been issued electronically and trans- completed and recorded on the main blockchain after de-
ferred with the help of an ultra-secure and reliable pub- livery and receipt of the cargo (ShipChain, 2018).
lic blockchain network in just minutes instead of days or The features of ShipChain may be summarized as fol-
weeks, and the chances of loss, theft or damage to the Bill lows (Shipchain, 2019):
of Lading have been dramatically reduced to near-zero (7 1. Visibility – unified solution for asset tracking (a single
Major Blockchain Technology Developments In Maritime platform from shipment to delivery)
Industry In 2018, 2019). 2. Trust – transparency through immutability (data stor-
age that cannot be changed, which is approved by all
Blockchain platform for global monitoring of goods – participants)
ShipChain
3. Control – thanks to secure ShipChain Vaults, business
ShipChain was established to address the problems fac- owners have complete control over who & how their
ing the logistics industry. The solution offered by ShipChain data is queried.
144 M. Jović et al. / Scientific Journal of Maritime Research 33 (2019) 140-148

Morpheus network Blockchain technology provides full transparency as the

GSCP platform enables operations within a large number
Morpheus Network is a full-service, global, automated,
of stakeholders in the maritime industry in order to
supply chain platform with an integrated payment sys-
achieve significant cost savings (Blockshipping’s GSCP ICO
tem utilizing blockchain technology (Morpheus.Network
– Transforming The Global Container Shipping Industry,
– Disrupt Global Trade, 2019)�������������������������
. Any errors in the docu-
2019).
mentation may destroy the entire consignment or create
additional costs for stakeholders. Several stakeholders Seaports are important nodes in the intermodal trans-
(importers, exporters, shippers, customs brokers, terminal port and numerous stakeholders operate in the complex
operators etc.) use numerous maritime documentations. seaport environment, (shipping companies, port authori-
Such documentation must be reviewed by the aforemen- ties, terminal operators, freight brokers etc.) (Tijan, Jović,
tioned parties and forwarded to a next location. Morpheus et al., 2019)�������������������������������������������������
. In an optimal situation, all information relat-
Network aims to simplify the described process and make ed to the cargo are available to all relevant stakeholders,
it more effective. Every time a document must be shared creating a digitalized connection. Each seaport which aims
among multiple institutions, placing that record on the to be competitive should accept digitalization which ena-
blockchain enables real-time updates that can be seen but bles transparency and smoother data exchange. However,
not changed. This will enable significant savings of both the prerequisite for the blockchain implementation is
time and cost, while at the same time ensuring a high level stakeholder connectivity.
of trust (Morpheus.Network – Disrupt Global Trade, 2019). Blockchain is definitely one of the most discussed top-
ics in the recent years and could have a tremendous im-
Global Shared Container Platform pact on the future of logistics and port digitalisation (The
Blockchain Potential for Port Logistics | KennisDC Logistiek,
The company Blockshipping created the “Global 2017). One of the seaports that showed large interest in
Shared Container Platform” (GSCP), a platform for more digitalizing and using blockchain is the port of Rotterdam.
manageable handling of containers and solving some of BlockLab (News – Blocklab, 2019) (a subsidiary of the Port
the most important problems of containerization in ship- of Rotterdam, co-founded by the City of Rotterdam) has
ping. Figure 3 shows workflow of GSCP platform (ICO built an application relying on blockchain software which
Review — 5 reasons why Blockshipping should be revolu- can securely track the ownership and location of cargo
tion the Global Container Shippin Industry, 2018). shipments: on average, 28 distinct parties are involved in
The GSCP platform aims to become the main IoT any single freight logistics transaction; with documents
(Internet of Things) platform for the shipping industry. containing potentially sensitive data on the shipment

Figure 3 GSCP platform (ICO Review — 5 reasons why Blockshipping should be revolution the Global Container Shippin Industry, 2018)
M. Jović et al. / Scientific Journal of Maritime Research 33 (2019) 140-148 145

changing hands up to 200 times between its being dis- According to Oude Weernink et al. (2017), blockchain
patched and its final delivery (Port of Rotterdam block- in seaports can be used in several ways, such as (Oude
chain solutions begin deployment, 2019). Weernink et al., 2017):
Blockchain technology can connect stakeholders that
were not previously associated, enable new forms of col- 1. Current exchange of information in seaports
laboration, and create new business opportunities. In
logistics, blockchain has the potential to transform port When the carrier enters the port, the cargo documen-
processes by documenting, validating and securing each tation is generally processed by the ship’s agent and sent
event in the chain (The Blockchain Potential for Port to the PCS – “Port Community System”. Figure 4 shows cur-
Logistics | KennisDC Logistiek, 2017). rent information flow in the import carrier process (Oude
Through its typical features, blockchain can add value Weernink et al., 2017).
to port logistics and port digitalization in numerous ways PCS allows the distribution of information between the
(An explorative study on blockchain technology in applica- stakeholders in the network to facilitate the movement of
tion to port logistics | KennisDC Logistiek, 2018). Therefore, containers throughout the process. not all the parties in-
according to KennisDC Logistiek, t��������������������������
hese are related to build- volved are included in the network (insurance companies,
ing trust, provision of secure data, visibility, network ex- banks, etc.). This process has inefficient means of commu-
pansion and integration of supply flows (The Blockchain nication, leaving enough space for improvements that a
Potential for Port Logistics | KennisDC Logistiek, 2017). blockchain can accomplish.

Figure 4 Current information flow in the import carrier process (Oude Weernink et al., 2017)

Figure 5 Blockchain information flow in the import carrier process (Oude Weernink et al., 2017)
146 M. Jović et al. / Scientific Journal of Maritime Research 33 (2019) 140-148

2. Information flow in seaports with the support of lysed. The research was conducted by collecting the most
blockchain technology prominent ways of using blockchain technology in ship-
Blockchain implementation may facilitate the exchange ping industry, with the emphasis on maritime transport, in
of information between parties involved in the process. order to determine the direction in which the blockchain
technology is developing.
This can be achieved by storing the cargo information on
the ledger. Figure 5 shows blockchain information flow in The impact of blockchain technology in shipping indus-
the import carrier process (Oude Weernink et al., 2017). try may definitely be considered positive, according to the
examples researched. As mentioned before, blockchain im-
Instead
�����������������������������������������������������
of exchanging documentation, stakeholders in-
plementation in shipping industry faces certain challenges
volved in the process are granted permission to access the
or risks (Tijan, Aksentijević, et al., 2019), (Gatteschi et al.,
blocks where the data are stored. This leads to the crea-
2018), (Karame and Capkun, 2018), (Zyskind, Nathan and
tion of a unique, shared piece of information that can be
Sandy’ Pentland, 2015) which should be minimized in order
accessed in real-time and with lower transaction costs.
to fully exploit the aforementioned advantages (Figure 6).
The process can be further accelerated by involving stake-
holders who are currently external of the process (banks, One of the challenges Blockchain technology faces
insurance companies). is the lack of standards, because not all stakeholders are
looking to implement similar blockchain solutions and
3. Blockchain application in all segments of seaport platforms. As a result, an interoperability issue may arise.
operations Although blockchain technology offers an innovative
platform for a new decentralized and transparent trans-
The database can be further enhanced by implement-
action mechanism in industry and business (Abeyratne
ing the Internet of Things (IoT) device by connecting them
and Monfared, 2016), it is still very immature. Numerous
as blockchain nodes. For example, trackers can be mount-
trials and blockchain pilot projects exist globally but they
ed on containers so the sensor signals can automatically
are now primarily linked to smaller groups i.e. partici-
record data on the blockchain without any user input.
pants in the industry (Maersk, IBM) who have started to
Moreover, sensors installed in the container can monitor
establish their own alliances in order to achieve the ad-
the status of the goods, providing information to the insur-
vantages of Blockchain technology. Nevertheless, the suc-
ance company. Furthermore, by connecting smart devices,
cessful projects will probably experience a fast expansion
it is also possible to fully automate the process. in shipping industry and in overall transportation chain as
well. Various experts consider that successful blockchain
5 Discussion implementation is possible only if all stakeholders are in-
volved in the process, such as shipping lines, terminal op-
Blockchain is certainly one of the most widely debated erators, manufacturers, banks, insurers, brokers and port
topics recently, and could have a lasting effect on the fu- authorities. As long as blockchain technology exists only
ture of shipping industry. In this research, business proc- in a limited area within the smaller pilot projects, benefits
esses that are part of shipping industry were identified of Blockchain technology (e.g. reducing time of document
and the current state of blockchain technology was ana- processing) will not be fully exploited. In this respect,

Figure 6 Blockchain advantages after minimizing the drawbacks

Source: Authors
M. Jović et al. / Scientific Journal of Maritime Research 33 (2019) 140-148 147

one of the main advantages of Blockchain technology is rollouts. Nevertheless, the blockchain technology possesses
reducing the need for paper documents. Global shipping huge potential for development and further improvements
industry, especially maritime transport still involves a in maritime transport.
large number of paper documents, prolonging the time for
processing the data and any step that enhances the cur-
Acknowledgments
rent state might have significant effects for the whole sec-
tor. Blockchain can in this case register all the document This work was supported by “DigLogs – Digitalising
changes and provide visibility of their location to all other Logistics Processes” (Interreg V-A Italy – Croatia 2014-
interested parties. Openly accessible distributed block- 2020) project.
chains that are not proprietary to one company can guar-
antee that nobody can easily forge the paper trail.
Positive aspects of Blockchain could actually change References
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