F E ATU RE THE POWER OF BLOCKCHAIN What is blockchain, and why is it so significant to the logistics industry? Maria Tarabanova, Business Diplomat at the Mile Unity Foundation and former head of the international department of FIDI member IWM Ltd, Moscow, explains W MARIA TARABANOVA, BUSINESS DIPLOMAT AT THE MILE UNITY FOUNDATION hat is blockchain technology? The definition is contained in the term itself since this is a digital block of chains with the basic idea being to facilitate secure, transparent relations between two or more parties that are involved in a transaction, without the need for any intermediaries. Blockchain offers a new form of storage, use, maintenance and control of records, where none of the blocks can be changed, enabling a unique piece of digital property or information to be safely and securely transferred. According to IHS Markit,1 a global information provider, the implementation of blockchain will play a pivotal role in the growth of the logistics industry including the moving and relocation business. A MATTER OF TRUST Traditionally, the financial system eliminated the need for trust between parties by using financial intermediaries, such as banks. Blockchain is able to eliminate the need for trust in any sort of transaction or interaction because of its technological characteristics (see panel, Blockchains main characteristics). The logistics industry is commonly regarded as a niche that may be revolutionised using blockchain because it is capable of changing the structure, management and performance of modern supply chains. The principal aims in logistics are to achieve better functionality, and a higher level of reliability and customer service. We know these can be achieved using blockchain, because some sectors have already implemented the technology. For example, in August 2018, Maersk and IBM signed an agreement to introduce the TradeLens Blockchain Shipping Solution, a digital platform based on blockchain technology. The platform provides door-to-door supply chain visibility, which enables all parties involved in shipping transactions to securely exchange shipment information. It automates the paperwork process by digitising documents and enables users to securely submit, stamp and approve documents. At the end of last year, the port of Rotterdam also started to test blockchain to link container logistics and payments, while DP World Australia, DB Schenker, Hamburg Sud and wine producer IUS have completed a blockchain trial for multimodal wine transportation from Australia to China. THE ADVANTAGES Regulation of international payments are currently centralised using SWIFT or SEPA. It can take up to five days to process a transaction using existing methods, with parties forced to pay high commissions and be involved in bureaucratic procedures. Blockchain avoids the use of intermediaries and commission fees, and means transactions can be processed in less than an hour. But this is only the tip of the iceberg. Currently in the logistics industry, documentation procedure and freight processing takes a great deal of time. The blockchain infrastructure is capable of accelerating these processes and enabling authenticity and immutability of information. Furthermore, the technology is able to simplify the tracking of supply chains down to the simplicity of payment from a mobile phone, and process and maintain a record of a full transaction from the goods leaving WW W. F I D I. O R G FF291JunJul19 pp58-60 Blockchain.indd 59 59 10/05/2019 16:29