APL Tests Blockchain Solution
A consortium comprising AB InBev, Accenture, APL, Kuehne + Nagel and a European customs organization has successfully tested a blockchain solution designed to eliminate the need for printed shipping documents and save the freight and logistics industry hundreds of millions of dollars annually.
The consortium tested a solution where documents are no longer exchanged physically or digitally but instead, the relevant data is shared and distributed using blockchain technology. An international shipment of goods for companies in areas such as the automotive, retail or consumer goods industries typically requires more than 20 different documents, many of which are often paper-based, to enable the goods to move from exporter to importer. Across these documents, up to 70 percent of the data can be replicated.
Blockchain is a new type of distributed database system that maintains and records data in a way that allows multiple stakeholders to confidently and securely share access to the same information. The technology is poised to revolutionize operations across a multitude of sectors, such as financial services, government, healthcare, entertainment and freight and logistics.
The consortium collaborated to test 12 real shipments, with various destinations, each with different regulatory requirements. Each organization involved in the trials typified a particular stakeholder in the shipping process: AB InBev represented a typical exporter; APL contributed its role as a shipping organization; Kuehne + Nagel provided direction on the requirements for a freight forwarder and a European customs organization replicated the regulatory requirements that cargo faces. Accenture provided the technological and consulting expertise on the blockchain technology and developed the technical architecture required to support a blockchain solution, leveraging the capabilities of its Singapore Internet of Things practice to rapidly build the prototype.
“As a facilitator of global trade and strong advocate of innovation, APL sees much potential in blockchain technology to accelerate the digital transformation of the container shipping industry, moving us from traditional paper-based transactions to more efficient, more secure and faster processes along the entire supply chain,” said Eddie Ng, head of Strategic Liner Management at APL.
Accenture and DHL recently released a trend report on blockchain technology’s potential to transform the logistics industry. Global supply chains are notoriously complex, with a diverse set of stakeholders, varying interests, and many third-party intermediaries – challenges that blockchain is well suited to address. The report includes initial findings on a working prototype developed by DHL and Accenture, which tracks pharmaceuticals from the point of origin to the consumer, preventing tampering and errors.
Documentation and administration are estimated to be one-fifth of the $1.8 trillion spent annually to move goods across borders. According to The World Economic Forum, by reducing barriers within the international supply chain, global trade could increase by nearly 15 percent.
According to the International Data Corporation, global spending on blockchain solutions is forecast to reach $2.1 billion in 2018, more than double the $945 million spent in 2017. In 2021 annual spending is expected to reach $9.7 billion.
Earlier Industry Trials
In February this year, Pacific International Lines (PIL), along with PSA International and IBM Singapore, tested a blockchain platform tracking cargo from Chongqing in China to Singapore via the Southern Transport Corridor, a key route being developed as part of China's Belt and Road initiative.
Earlier that month, global logistics provider Agility became the first freight forwarder to collaborate on Maersk and IBM's blockchain solution. Multiple parties have piloted the platform including DuPont, Dow Chemical, Tetra Pak, Port Houston, Rotterdam Port Community System Portbase, the Customs Administration of the Netherlands, U.S. Customs and Border Protection.
The first full agricultural commodity transaction using a blockchain platform was completed by Louis Dreyfus Company (LDC), Shandong Bohi Industry, ING, Societe Generale and ABN Amro in January.
The trade included a full set of digitalized documents (sales contract, letter of credit, certificates) and automatic data-matching, thus avoiding task duplication and manual checks. Time spent on processing documents and data was reduced five-fold. The companies involved said that other benefits included the ability to monitor the operation's progress in real time, data verification, reduced risk of fraud and a shorter cash cycle.
In the test, the Easy Trading Connect platform was used to execute a soybean shipment transaction from the U.S. to China. The transaction involved user participation on the blockchain-based platform by teams from Louis Dreyfus Company as the seller and Bohi as the buyer, with banks issuing and confirming the letter of credit. Russell Marine Group and Blue Water Shipping also participated in the process, issuing all required certificates. The U.S. Department of Agriculture provided valuable insights on how to include phyto-sanitary certificates in the process.
Last year, Israeli container shipping company ZIM has conducted a pilot test of a paperless Bills-of-Lading based on blockchain technology, the first of its kind led by an ocean carrier. The test was conducted in cooperation with Sparx Logistics and Wave Ltd. During the trial all participants issued, transferred and received original electronic documents using the Wave Application. The containers, shipped by Sparx Logistics from China to Canada, were successfully delivered to the consignees.