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Rise of the Smart Port: A Case for Blockchain Technology?

30 July 2017
– 5 Minute Read


Toward the end of 2016, I wrote an article on the nature of blockchain technology in the context of payment flows in international trade transactions and its potential to cause a fundamental shift from an “internet of information” to an “internet of value”. At the time, the term “blockchain” was fast becoming noticeable as a buzzword heralding a promise of disruption across a number of industries that are dependent on trusted intermediaries (notably banks and other centralised registries or authorities).

For those who did not read the article, the crux of this exciting technology (the backbone of Bitcoin) is the transfer and recording of transactions via a secure and immutable distributed ledger, instead of accessing a single database under the control of a central trusted intermediary, which may be susceptible to external security threats or internal manipulation. The technology has led to the coining of the phrase “security through openness”.

The hype surrounding blockchain shows no sign of slowing down, with the release of more articles, studies and pilot projects seemingly than ever before. It is important to mention that blockchain does not necessarily offer a guaranteed value-add to all scenarios – in fact, it is predicted that this keen initial hype may well be replaced by a phase of disenchantment with the technology. However, it is difficult to ignore the compelling practical advantages for certain industries, experts seem to agree that one way or another blockchain is here to stay.

In particular, blockchain technology offers exciting new opportunities to streamline existing shipping and logistics operations. To give some examples:

  • Earlier this year, it was revealed that IBM and Maersk have teamed up to create an “end-to-end” blockchain solution which aims to digitize the entire supply chain process. The collaborative platform is designed to involve a network of shippers, freight forwarders, ocean carriers, ports and customs authorities with the aim of vastly reducing the cost and complexity of trading by using this technology to establish transparency among trading partners. 
  • The Danish Maritime Authority has recently launched an innovative pilot project to explore the digitization of the ship registration process in order to create a more transparent, efficient and secure system which is easily accessible from all over the globe. This has exciting implications for creating an immutable record showing title and mortgage information for vessels. 
  • Another area which has been identified as standing to benefit from a blockchain-based network is the maintenance of vessels and offshore drilling units and increasing transparency in this regard. The idea is for certain events, conditions and maintenance operations to be recorded in a digital ledger which is shared between the vessel owners, classification societies as well as the vessel’s flag state for purposes of monitoring compliance. 

Ports are key and central nodes in the supply chain and the adoption of blockchain-based solutions by ports could prove to be a game changer. Ports such as Rotterdam and Antwerp have led the way in introducing and testing digital solutions, automation and technology to enhance operational efficiency and create a competitive edge.

It is pleasing to note that the Port of Durban is also taking its first steps in embracing the notion of the “smart port”, this having been a key subject of discussion at both the 2016 and 2017 Annual Maritime Summit. Since then, Transnet National Ports Authority has reportedly appointed an entity called T-Systems to plan and roll out the first phase of an initiative to increase throughput and efficiency and to decrease congestion at the Port of Durban. This is to be achieved by using drones to monitor the port area, as well as tracking and sensor technology connected via and LTE wireless network. 

Blockchain has the potential to integrate very well with these types of systems, particularly when it comes to the internet of things and real-time monitoring in order to creating a tamper-proof record of information which can be accessed easily and securely by a number of parties. 

A good example of this is a pilot project being conducted at the Port of Antwerp by a start-up company called T-Mining. The solution is aimed at giving truckers, shippers and other interested parties (i.e. forwarders and agents) greater certainty when coordinating the release of containers. The blockchain-based platform which has been created by T-Mining, will be able to give a particular truck driver clearance to access the port to collect a particular container and will verify certain authorisations relating to containers. This approach stands to be enhanced where digital trackers or other IoT devices are installed in trucks or containers, creating greater efficiency, not to mention security. 

It will be interesting to see whether the Port of Antwerp’s latest pilot phase is successful. Given the current issues with congestion of trucks in and around the Port of Durban, a secure and transparent container release and collection platform based on blockchain technology could offer significant long-term benefits. In any event, South African ports (and logistics companies) would do well to familiarise themselves with blockchain and keep abreast with developments in this space – it may make all the difference in retaining a competitive edge in the future.

This article first appeared in the Sunday Tribune.