G2 Ocean: Biggest Challenge of Using Blockchain in Shipping Is Implementation
Using blockchain technology can reduce the administrative burden of shipping companies considerably. According to Leif Arne Strømmen, Vice President of Innovation and Head of Project Cargo at G2 Ocean, the biggest challenge is to get people to understand, trust and then apply the technology.
G2 Ocean is the largest open hatch shipping operator of project cargo (tonnage wise) and operates 130 vessels. It sees blockchain as a unique opportunity to digitalise and automate manual processes between its clients and subcontractors. The company completed a pilot this year of CargoX’s blockchain-based Smart Bill of Lading Solution together with logistics company Manuchar. Conclusion of this trial: the paper Bill of Lading is ready for retirement.
Transfer of Documents in Seconds
On 11 September, Strømmen explained this view during a presentation at the Project Cargo Summit. Ha said: ‘So far, the Bill of Lading was deemed trustworthy by how many organisations had approved the document with their stamp. Complete nonsense of course.’
In the company’s blockchain experiment, ownership of goods was transferred with shipments travelling from China to Peru. The solution is powered by the Blockchain Document Transaction System (BDTS) technology. Compared to classic IT systems, the CargoX Smart B/L enables users to clearly state and transfer ownership, create Bills of Lading, and also attach other accompanying documentation in electronic format. Documents can be transacted among parties to a specific process in a way similar to a banking transaction.
Strømmen was clear about the benefits: ‘First of all, using blockchain removes the paper trail and gets rid of courier shipment of documentation, which would often take days if not weeks. With blockchain, transfer of documents takes only seconds.’
The second large benefit of blockchain is that the technology is based on verification of the information exchanged. This means ‘The document transaction reliability in this system is undisputable,’ said Rune Birkeland, CEO at G2 Ocean, after the blockchain trial was completed.
Strømmen added to this during his presentation, that ‘the information transferred via blockchain cannot be lost, stolen, altered or deleted.’ Therefore, it provides a level of safety and reliability never seen before in the business world. In future, the technology will also be suitable for other types of documentation such as customs documents, bank documents, packing lists and such.
Then why does it take time to implement the technology? According to Strømmen, the blockchain trial conducted by G2 Ocean was a ‘customer journey of creating trust. We had to educate customers, the customers of customers, customs agents, shipping agents and captains. They needed to understand the technology in order to trust it and apply it. Altogether, this is quite a long journey. Our next step will be to scale this up and offer it as a value-added service to our clients.’
The company is also working with international P&I Clubs towards wider approval of the technology. Yet, this is also a slow process, concluded Strømmen.
Picture: Leif Arne Strømmen, Vice President of Innovation and Head of Project Cargo at G2 Ocean: ‘The paper Bill of Lading is ready for retirement’ (by G2 Ocean).