How Blockchain Contracts and IoT Could Save Global Shipping Billions

A “case study event” in Hong Kong this month will look at blockchain’s potential to solve problems in the global freight shipping industry. The November 24 event, titled “Chain of Shipping,” will take place as part of Hong Kong Maritime Industry Week.

Also read: China’s First Online Insurance Firm Starts Blockchain R&D

Shipping: Paper and Digital Threats to a Massive Industry

The shipping industry still relies heavily on paper documentation. As a result, it suffers from quality control issues, document fraud and expensive dispute arbitration. Even as various segments of the industry become digitized and accessible online, it faces the new threat of cyber-attacks.

There’s a lot at stake: Even last decade, liner freight made up two-thirds of all global trade. Additionally, it employed 13.5 million people and moved $4 trillion worth of goods in 2007 alone.

Hong Kong-based blockchain and Internet of Things (IoT) startup Chain of Things is hosting the November event. Additionally, it has endorsement from government tech accelerators Hong Kong Cyberport and the Hong Kong Science and Technology Parks Corporation.

Chain of Things director Hans Lombardo told Bitcoin.com that running the shipping industry on blockchain-based contracts could save huge amounts of money.

“Fraudulent shipping document costs the shipping industry billions in losses. It is difficult to know exact numbers on fraud because it is so widespread. One of the problems is that 80 percent of shipping documentation like ‘bills of lading’ is still in paper form.”

Fraud cases typically involve cargo theft and mislabeling of contents for the purposes of deceiving buyers or smuggling illegal goods.

Combining Smart Contracts With IoT Technology

Chain of Things wants to combat such misdeeds by combining smart contracts and IoT sensor devices. The company will discuss its case study plan at one session of the Hong Kong shipping event.

It will look at ways to install sensor devices in containers or ships, which will “collect data on the conditions of shipments and share that data in real-time to relevant parties and inform the smart contract, called a ‘Smart Bill of Lading.'”

These two technologies working in tandem would detect issues with cargo from early in a shipment. Moreover, the contracts could even self-execute to refund a damaged party without the need for litigation or any human intervention.

Chain of Things says it’s aware not all problems are so straightforward, so intends its case study event in part to discuss how useful its solutions could be. The conversation it starts could also bring forth other ways to make shipping more efficient and transparent.

Next Steps, and Choosing a Platform

From there, the company will begin to work on its next steps — including the best blockchain platform for purpose.

“We are currently using an Ethereum private node on Microsoft’s Azure for experimentation,” Lombardo added. “The case study is examining whether this will be suitable as private or public blockchain system.”

Chain of Things hopes to attract both technologists and shipping/logistics industry participants to its one-day event. There, session speakers will explain each other’s relevant issues and terminology.

Other partners of the Chain of Things’ event also include: Women’s International Shipping & Trade Association (WISTA), Young Professionals in Shipping Network (YPSN), Jen Advisors, Bolero, PwC and the Infiniti Lab. Event registrations are here.

Can smart contracts and IoT save billions for the shipping industry? What’s the best platform? Let’s hear your opinions.

Images via Shutterstock, Chain of Things

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