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david jean marieThere is no doubt that 2017 was another challenging year for the shipping industry in the region and also in the wider global context. Persistent overcapacity, weak global trade and freight rate volatility continue to create stormy waters that test our resourcefulness.

The fact that we have weathered the storm is testament to our resilience in the face of significant change. And while there are some encouraging signs trending towards improved market conditions and stability, we must acknowledge that we have a fair distance to go before we can realise this outcome. So as we forge ahead with a healthy dose of cautious optimism, we must adequately plan for the difficulties ahead and take the long-term view to ensure the viability of the industry.

Preparing for the future

In adopting the long-term view, it is important that we focus our attention on the developments that will shape the future of the sector. The shipping industry has long had the reputation of being conservative and slow to change, but I do believe that many of the players increasingly understand the value and necessity of staying on the cutting edge.

It is certainly in our best interest to embrace doing business in the technological age. To continue to hold on to analogue processes in the fast-paced, digital maritime ecosystem of today will only ensure that we are left behind. The industry is poised for great transformation in the months and years to come; and we must position ourselves to take advantage of the opportunities that arise.

A considerable portion of the groundwork for this transformation has already begun with developments that link e-commerce with the logistics supply chain. This has brought us to the cusp of what some industry experts are calling ‘revolutionary’ – blockchain technology.

Delivering greater efficiency

Blockchain technology has been gaining significant traction across various industries, with shipping taking a particularly keen interest. This is so because this solution has the potential to save the global shipping industry billions of dollars.

The appeal of blockchain technology lies in its ability to allow the industry to go paperless while enabling all parties to benefit from a transparent and secure online environment throughout the supply chain. The management of all transactions is decentralized, as it takes place collectively by the network of participants in a peer-to-peer environment.

IBM and Maersk are currently partnering to use blockchain technology to manage and track the paper trail of millions of shipping containers across the world. Also, the Israeli container shipping company ZIM recently completed a successful trial of a blockchain solution to carry out paperless bills of lading in which all parties in the supply chain received original electronic documents.

Most of the shipping sector’s transactions are currently paper-based. IBM estimates that the cost associated with document processing and administration can be as high as a fifth of the physical transportation costs. And this figure increases when paperwork is delayed, lost and altered.

Blockchain technology promises to reduce paper-related expenses through the creation of a permanent and transparent database that can be accessed by all relevant parties. All parties need to agree before a transaction can be confirmed or modified, making it a secure platform to exchange sensitive documents and even transfer funds.

So the benefits of this new technology are clear – it can reduce fraud and errors, cut down on the transit time of goods, improve inventory management, reduce costs and eliminate waste. The advantage of making calculations, approvals and other transactions automated and paperless is, indeed, a powerful selling point of this solution.

Points to consider

Although the application of blockchain technology in the shipping industry is far from achieving maturity, there is enough evidence to support being an early partner in this evolution of maritime commerce. Preparing to adopt the technology early has the potential to ultimately increase your competitive advantage.

During this period of preparation, it is useful to consider several questions that might arise from the deployment of this technology. Will the level of automation that can be created by blockchain eventually replace a significant number of jobs in our region? If so, how do we deal with this issue? What kind of capital outlay will be required and will it be within our reach?

There will be hurdles on the path towards wide-scale adoption of blockchain technology, but the benefits make this the inevitable future of the shipping industry. It has the ability to increase profitability and positively impact vessel operating efficiency and our environmental footprint. 

The coming year and beyond will certainly prove to be an equally challenging and exciting time, as shipping becomes more closely aligned with the wider supply chain. I believe that any progress we make will be predicated on working together to strengthen our position and actively taking steps to mitigate industry challenges. I look forward to participating in this concerted effort to maintain our viability and competitiveness in the global industry.

David Jean-Marie
President 
Caribbean Shipping Association

 
 
 
 

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