What a blockchain can tell us about MSC Zoe and shipping practices

Shipping is still a black box – it's opaque. We know that people are cutting corners, or simply committing uninformed mistakes, but without real visibility and responsibility, there is not much we can do, says John Monarch, CEO of ShipChain.

It may take months before the authorities know why 281 containers washed in the sea the
MSC Zoe in the North Sea last week – that is, if they are even able to gather sufficient evidence. Local media tell us that the ship has encountered particularly rough seas and strong winds. Whatever the final verdict, the prospect of hundreds of containers – some containing dangerous organic peroxide and lithium ion batteries – that wash themselves on crowded beaches in Europe has once again brought maritime safety and practices to the forefront of the awareness of public.

Now that the Dutch military is intervening to help the free beaches where the containers are washing, we must ask ourselves, what can be done to prevent such maritime disasters from occurring in the future? And while this incident is a cause for concern, it is the hundreds of similar incidents that never make it known that they should really worry about the human, environmental and economic costs imposed by the lack of responsibility in global transportation.

It does not have to be this way. Of course, there will always be natural events beyond human control and the machine, that's what insurance is used for. But there is a proven technology that makes it almost impossible for the actors to hide bad records across the supply chain. Blockchain promotes higher commodity management standards and, equally important, identifies exactly where a shipment was handled incorrectly, by whom and how.

But before explaining how the blockchain can achieve this goal, let's talk about how we got to a place where it is normal for billions of shipments of goods to be lost or destroyed every year, including washed at sea.

We landed a man on the moon half a century ago, but navigation practices remain stuck in the stone age. Of course, we have digitized many features, eliminated significant waste and increased visibility, but we are still relying on the same automatic reporting processes we did decades ago. When a shipment arrives at its final destination, it is changed dozens of times, but nobody knows for sure when, who, how and under what conditions.

These are circumstances that promote corner cutting – if nobody knows if a sender has followed best practices, there is less incentive for him or her to do so. Since the main goal of a company is to make money, "cut costs" and "cut the corner" start to look very similar. And even when companies are doing their best, practices that seem valid may not always lead to safe and effective goods management.

When the corners are cut, accidents happen and these accidents can be expensive.

Basically, shipping is still a black box – it's opaque. We know that people are cutting corners, or simply committing uninformed mistakes, but without real visibility and responsibility, there is not much we can do.

Here's where the blockchain arrives.

The main strength of Blockchain is that it promotes transparency and immutability – and these factors, in turn, promote better practices. That's how. Because transactions are automatically recorded in a centralized register, information is readily available to all parties involved in the transaction, ensuring maximum transparency. For example, a container is loaded on a ship after inspection in Port A, at which time the load was in good condition, without any abrupt travel or movement. Upon unloading at port B, the container sensors upload new information showing extreme turbulence during the journey. The container is transported by hand to its final destination and, surely, there was some damage.

Two important factors become clear in the above scenario. First of all, the damage occurred while on board the ship. Secondly, the damage immediately corresponds to the turbulence recorded by the sensors installed on the container. Has the container been loaded and fixed improperly, the container has been stored improperly, has there been a power failure? Now, we have a way to identify problems and correct them!

It is the immutability of the data recorded on the blockchain which makes it so reliable. Once you have registered the details of a transaction, they can not be deleted or modified. Thanks to the blockchain, it is clear who is wrong and what needs to be done to prevent it from happening again.

Blockchain promotes better and safer practices. When we apply the dynamics to shipping in general, it creates an ecosystem of responsibility because once your digital signature is applied to a transaction, such as the transfer of a container in a warehouse between a trucker and a receiver, details like time of transfer. , conditions, transit conditions and more are visible to everyone. All of a sudden, cutting that corner seems a lot less appealing once everyone can see it.

The terms "process integrity" and "disintermediation" are often applied to blockchain protocols for this reason. Basically, they mean that it is easy to set the rules and make sure they are followed. The parties in any blockchain contract transaction know that everything will be done in accordance with the agreed protocols. If everyone looks at the same data and there is no way to falsify them, there is no need for third-party intermediaries.

We read some negative aspects about how the blockchain promotes better practices and helps to prevent mistakes like the one that occurred aboard the MSC Zoe in the North Sea, this pushed the drafting of this article.

It all comes down to the elimination of errors and the acceleration of response times once identified. With this new technology, registration, monitoring, verification of physical product properties, linking and sharing can be done in real time. This is even simpler in the context of the public blockchain, where all this information can be aggregated, questioned and exploited securely to improve practices. Tracing and tracking shipments via blockchain eliminates the potential for human error in most cases, eliminating the costs and delays that plague transactions in today's supply chains.

We are heading towards a 'era where load factors such as temperature, humidity, shock exposure and other details can be agreed upon measures incorporated into smart contracts. These measurements can be loaded on a common platform and automatically acquired by the sensors.

Speaking from years of experience, people in the shipping industry are not "bad actors". We are some of the most dedicated and hardworking people you will meet. When mistakes occur, it's not because we're trying to fool the people who entrust us with their shipments. Instead, it's because shipping is a complex and high-risk business. We are ready to embrace best practices and, thanks to the blockchain, it is easier than ever.

When we create an ecosystem that identifies any violations of agreed limits, it actually authorizes shippers to respond to problems and mitigate them when they occur and to take measures to avoid them in the future. We might never know exactly why those containers were washed away from the deck MSC Zoebut the blockchain tracking and tracking capabilities offer us a path to drastically reduce these occurrences in the future.