As reported in FinansWatch, 22 European countries have joined forces to develop a common blockchain infrastructure. The Minister of Industry has confirmed that Denmark will be the first country in the European Union to use blockchain technology in its shipping industry as part of this initiative.
The Ministry of Business issued a press release, in which Brian Mikkelsen, Business Minister stated, “Denmark is already exploring the potential of blockchain technology. As the first country in the world, we will use blockchain technology for registering ships in the Danish registries.”
In this way, blockchain technology may be used as an immutable, cross-border record of transactions and shipping data. It will allow countries in the EU to cooperate using “future-proof standards and solutions.” With the signed declaration, the Government Disruption Council will discuss other business challenges that may be solved with blockchain and distributed ledger technology, in a cooperative effort between the member nations.
There are many ways that the shipping industry may take advantage of blockchain technology in the EU. Shipping is one of those industries that relies on traditional methods of conducting business, including huge amounts of paperwork such as sales contracts and agreements, credit memos, bills of lading, port documents and other documentation. As cargo is passed through the supply chain and touched by all of the parties involved, there are multiple opportunities for errors, fraud, damage and other issues. To minimize these issues, substantial time must be invested into each stage of the cargo’s voyage as paperwork, funds and the actual cargo passes from hand to hand. Enter blockchain.
Using the immutable characteristics of a distributed ledger, each touchpoint along the way may be registered with a new record stored on the blockchain electronically. This cuts the amount of paperwork required, while also serving as a trustless network that isn’t dependent on any particular company or government as in the case of this EU partnership.
Each of the blocks is timestamped, and stored permanently on the blockchain. As the data may not be altered or removed, it is much easier to identify where the chain breaks; which ports process cargo more slowly, where breakage or loss occurs, and which locations provide the best service. Over time, the collected data enables a shipper to make data-driven decisions in how it chooses to move cargo from one place to another with the greatest likelihood for success at the lowest cost.
In addition to tracking the voyage of a vessel and its cargo, blockchain technology may also be used for the actual transactions between parties. Banks would no longer need to be involved as mediators between parties, and funds are transferred instantaneously as actions are confirmed. At its most basic level, a smart contract may keep track of all activities, and all transactions, using a rules-based system to provide a fair economy that requires no trust.
The EU partnership is not the first blockchain project used to solve supply chain problems. Recently, a Cardano (ADA) initiative to track Ethiopian coffee was launched, and PwC Hong Kong and PwC Singapore partnered on a VeChain project. There’s a race around the globe to utilize this technology to improve existing systems, and we can expect more to come as the movement picks up steam.
Daniel is an experienced and dynamic entrepreneur with a demonstrated history of launching and operating successful businesses. Skilled in Business Strategy, Technical Consulting, Coaching, Sales, Entrepreneurship, Team Building, and Public Speaking.
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