Pacific International Lines (PIL), the largest privately-owned shipping firm in Singapore has recently partnered with IBM to improve their existing supply chain management processes via blockchain technology. According to an article published by the Business Times on October 4, 2018, the goal is to create a digital bill of lading, an electronic document provided to acknowledge the receipt of cargo for shipment.
Blockchain Technology Reduces Costs in the Management Process
In the shipping industry, the Bill of lading is an important document that provides evidence for the carriage, the receipt, and ownership of goods. It also doubles up as a document of reference for banks when it comes to extending trade finance. The Bill of lading is generally mailed from one organization to another which, unfortunately, can lead to instances of fraud and even the loss or misplacement of the document. These situations can be time-consumptive and very costly to businesses.
Blockchain technology can be beneficial for the shipping industry and the supply chain process. It can ensure that documents are exchanged directly during real-time which increases transparency, eliminates any forgeries, disputes, and potential risks in the supply chain. Lisa Teo, PIL’s Executive Director, mentioned that “working with a complex logistic network comprising ports and terminals, agencies, government entities, banks and shippers, a systematic supply chain management is important to lower costs.”
The Maritime and Port Authority of Singapore, Singapore Shipping Association, Infocomm Media Development Authority, Singapore Customs and the Bank of China’s Singapore Unit have also backed the partnership between PIL and IBM.
The digitalization of the Bill of Lading comes more than a year after IBM, PIL and PSA International signed a memorandum of understanding in August 2017 to explore blockchain technology in the supply chain management sector.
Shipping and Supply Chain Industry Looks to Blockchain Technology
PIL is, however, not the only company in the shipping industry to look to blockchain technology to improve their existing supply chain management processes.
As previously reported on BTCManager, in 2017, Tokio Marine and NTT DATA developed a blockchain solution for the international trade finance market. The Japanese insurance company managed to trial beyond a bill of lading, to a letter of credit, and commercial invoice on the blockchain network. In the proof-of-concept, it was proven that the blockchain system reduced 85 percent of the shipper’s time. It was also significantly more accessible for consignees and banks to access the documents.
However, despite the positive results, blockchain technology may not be mature enough and too young, to support the global supply chain. Christian Lanng, the co-founder and CEO of Tradeshift, an online invoicing platform noted that while blockchain technology has excellent potential, the problem is with today’s supply chains.
He told CNBC in 2018 that existing supply chains were not built to change. While certain parts of the supply chain can benefit from blockchain, it’s currently too expensive and costly for the entire supply chain to run on blockchain technology.