Is Blockchain the new khaki?

Maersk Line and IBM have rightfully featured heavily in the media recently for their initiative to revolutionise shipping through the use of Blockchain – and as a result I have been getting a lot of questions. To be honest, I wouldn’t pay attention to the technology part of it. It isn’t interesting to anyone else than the people who already run all the stuff you daily communicate through, pay with, play with or get the latest Liverpool F.C. news on. I would, however, pay significant attention to what it can do. In short: Blockchain can create trust. Or perhaps more correctly, reduce mistrust. It is a ledger of events. Once an event has been recorded it cannot be altered without being easily identified by other entities in the Blockchain. So because you can catch fraudulent behaviour quickly it is the perfect technology for areas of high mistrust, such as crypto currencies and financial services…and logistics/shipping isn’t far behind on that list. Historically many instruments have been used to manage the mistrust/spread the physical and “mental” risk: the B/L (carriers take on a (limited) risk), Letters of Credit (banks take on the risk), insurances etc. None of the parties take on the risk for free – nor should they – but with Blockchain, there is an opportunity to reduce this. So it is no wonder that IBM has been launching solutions based on it since 2016 and there are multiple start-ups in the supply chain space such as SkuChain (I give Sriram credit for bringing the Blockchain to my attention). A Blockchain ledger can give the relevant parties access to the information/events when it becomes available. This could be customs status, container position, reefer temperatures or cargo condition – all of which in turn allows for automation, data analysis, elimination of rework…the list goes on. The industry players will focus on the benefits of automation and speeding up the document handling – and naturally IBM and Maersk Line will aim to monetise their role in this, but it will be minor compared to the overall savings generated. How much the banks and insurance companies potentially could lose is too early to say, as although revenue may be down, their actual risk is also reduced along with the associated administration costs. Although the savings may drive the initiative forward just imagine what can happen as trust starts to increase. Could risk and costs be be managed completely differently between shipper and consignee than we see today? Will the B/L as we know disappear? Could we see freight rates become dependent on on-time-delivery of each individual container or even SKU? Could carriers offer shipment specific rates without risk of other shipments sneaking in under the same terms? Or perhaps most importantly, imagine the value to the standard consumer if the retailer knows exactly where those khaki pants are in the supply chain…