5 Ways Blockchain Technology Is Revolutionizing the Shipping Industry

Despite increased levels of global trade, shipping still maintains almost archaic ledger processes. Sales contracts, bills of lading, charter party agreements, and other related business operations still heavily rely on large amounts of documents and paperwork.

This rather traditional approach to data management is not only time consuming and prone to human error, but it also fails to meet the rising demands of e-commerce such as same-day deliveries.

Indeed, many vessels arrive at their discharge ports before their accompanying documents due to bureaucratic inefficiencies.

Blockchain is a dynamic game-changer that has the power to address the current inefficiencies plaguing the shipping industry and ensure a seamless delivery of data in an encrypted format.

But before we examine the transformative nature of this digital ledger, it’s important to understand how this technology works.

What is blockchain?

Blockchain is a type of record-keeping technology. As the name implies, digital information is stored and managed in “blocks” of information. Cryptographic principles or the chain ensures these blocks of data are secure, making their data immutable.

While blockchain technology is typically associated with cryptocurrency, its ability to safely secure data in a democratized system makes it ideal for numerous applications.

In terms of shipping, blockchain represents a forward leap in efficiency, data security, and streamlines the management of sensitive and important documents. And as shipping is not immune to cyberattacks, the use of a block-based system ensures shipping companies and freight forwarders are better equipped at deflecting cyberattacks.

How shipping can take advantage of Blockchain

From greater transparency and standardization to amplifying data security, here are some of the ways by which blockchain technology will advance the shipping industry.

1.     Eliminates tedious paperwork

Blockchain enables carriers, freight forwarders, and producers to go paperless. The ability to perform electronic record keeping can prove to be a productivity boon.

By cutting out paper throughout logistic processes and turning to blockchain for data collection, financial transactions, and charter-party agreements, companies can experience more fluid freight movements.

This eliminates the current tradition of requiring mass amounts of documents to accompany the delivery of freight. No longer do these documents have to pass through several hosts and parties, radically overhauling processing times at ports.

The encryption process of blockchain enables all parties, from custom authorities and terminal operators to freight forwarders and transportation companies, to forgo the old method of checking and rechecking seemingly endless amounts of paperwork at every touch point.

Blockchain ensures that the exchange of information is seamless and instantaneous. Instead of bureaucratic procedures taking days and weeks to perform, processes can be accomplished in mere minutes, freeing up the delivery of cargo the moment they arrive at their desired port.

2.     Eliminates human error

To further compound the previous advantage of blockchain, the incorrect management of export documents can lead to significant delays.

Providing the wrong contact or address means your delivery arrives late or in worst case scenarios, doesn’t arrive at all. Including the wrong payment information on documents may result in you or your carrier not getting paid on time.

Blockchain’s software addresses these inefficiencies thanks to its ability to automate tasks. Contracts can be automated to complete certain procedures like releasing payments once the preexisting conditions like port delivery are triggered.

Blockchain can also be coupled with other emerging technologies like optical character recognition (OCR) and Advanced Analytics to ensure documents are checked for completeness and validated with existing data patterns.

This eliminates human error that can occur during document checks. This also ensures that records are instantly verified with a single digital record, accessible by all necessary stakeholders.

The end product results in enhanced workflow management and the automatic execution of workflow steps to improve processing times.

3.     Increased security

Like any other industry, shipping is not immune to security breaches.

Several high profile cyberattacks in recent years, like the 2017 attack against the world’s largest container shipping company and the 2018 attacks against two of the largest international ports in Spain and the U.S. has highlighted the need for greater awareness in the vulnerability of existing shipping processes.

And as the shipping industry continues to become increasingly dependent on software-based systems, these attacks demonstrate a greater need for cybersecurity management.

As blockchain works on cryptographic principles the technology creates an immutable ledger. A key feature of blockchain that increases transparency and brings much-needed visibility to the logistics processes is hash functions.

And as no two hashes are the same, sort of like a mathematical fingerprint, stakeholders can immediately track any changes to the data stored in the blockchain. This minimizes fraud, allows for greater accountability, and ensures all accompanying documents are less likely to be tampered with.

4.     Improved oversight and transparency

As briefly touched on, as the shipping process goes through numerous touch points in the chain of custody, the antiquated process of faxing and scanning documents includes a high risk of alteration.

Not only are these changes hard to track, but it can also be near impossible to determine why changes were made to the documents.

Through hashing, blockchain enables all stakeholders to quickly identify what modifications were made to the documents, when they were made, and most importantly, who made the changes.

Even just adding a punctuation mark will be reflected in the hash, making it easy to determine any minute changes to the ledger.

And with each block header containing a timestamp, knowing when changes were made to the ledger along the chain of custody provides significant oversight and transparency, particularly during document transfers.

5.     Incredible cost-savings

The over-reliance on traditional processes commonly used in the shipping industry has resulted in administrative inefficiencies, uncoordinated ledger distribution, and payment disputes which delay payments for numerous companies.

Estimates show that the freight industry has $140 billion occupied by ongoing payment disputes. And that’s not an annual estimation, this occurs daily in the freight industry. The average invoice in the freight industry takes over 40 days to be received.

And due to paper transactions, administrative costs have ballooned up to 20 percent of the costs of transportation.

These numbers represent significant hindrances to streamlining the supply chain and logistics processes. By using a blockchain-enabled solution, shipping companies can reduce their over-reliance on paper transactions, saving millions of dollars.

The use of blockchain’s “smart contracts,” a type of computer protocol that automatically implements the agreed-upon terms and conditions by all involved parties, will facilitate real-time payments, result in more streamlined invoicing that provides companies financial relief when needed.


Digital tools like blockchain can forge a new route for the shipping industry.

By integrating blockchain and other emerging technologies to existing systems, companies can obtain real-time data, optimize delivery processes, streamline the supply chain, and predict future trends or demands.

Just as important, blockchain provides companies the opportunity to streamline their workflows and processes. This results in improvements across all service levels and increases end-to-end visibility while cutting costs and raising customers’ expectations.

While the speed with which change occurs is overwhelming and can create so much complexity, acknowledging, and eventually adopting, digital innovations like blockchain will allow the shipping industry to identify missing capabilities and remain ready to pivot according to future demands.



Paul Rehmet is the Chief Product Officer for Shipa Freight. He is responsible for translating the company’s vision into an easy-to-use online freight platform for its customers. In his 25-year career, Paul has held various technology leadership positions with early-stage startups and Fortune 500 companies including Unisys, Destiny Web Solutions, and US Airways.

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