I was startled to see yesterday that China’s freight activity has been in contraction for the past six months. Given the country’s push to increase its global footprint, and its dependence on manufacturing and exports, this doesn’t look good.
So I did a bit more digging and saw that the Baltic Dry index, which assesses the price of shipping raw materials by sea, shows that freight activity overall has been falling sharply since April (which did not happen in the previous two years), and is well below 2014 levels.
Global shipping is slowing down?
All the more reason, then, to reduce costs and streamline processes, as fast as possible.
With several enterprise firms around the world examining the potential impact of blockchain technology on supply chain logistics, progress is being made.
Microsoft’s Project Manifest platform plans to track everything from auto parts to medical devices, and as of May 2017 had 13 members, including Auburn University and supply chain tech firm Mojix. One pillar of the project is the connection of RFID scanners to the ethereum blockchain. Previously, Auburn University’s lab succeeded in combining RFID technology with the electronic data interchange transaction standard that improves supply chain traceability using centralized databases. It will be interesting to see what impact decentralized ones will have.
Earlier this year, the Danish shipping giant Maersk revealed the completion of its first live blockchain trial, aimed at reducing the amount of expensive and time-consuming (not to mention error-prone) paperwork that a global supply chain requires. A 2014 study commissioned by the company showed that an average of 200 separate transactions, passing through the hands of 30 counterparties, are involved in the shipment of a product using a shipping container. A blockchain platform can streamline the verification and transfer of the relevant documents, giving the counterparties access to the real-time information they need to process their part.
After a difficult year which saw profits decline, plus the rocky outlook for global shipping signalled above, the cost reduction a live platform could offer would be welcome.
Late last year, the port of Rotterdam formed a blockchain consortium focused on logistics, along with ABM Amro, Royal FloraHolland (which ships flowers) and several research institutions. The group plans to focus on testing the sharing of contractual and logistical information.
And there are many others.
However, given the obvious inefficiencies, and the shaky position of world freight – not to mention its importance in the global economy – it is surprising that there aren’t more.
You know the adage about complex systems not changing until they absolutely have to? That time may have come.