The Commonwealth Bank sponsored the latest Shipping Australia Business Breakfast where a panel of experts discussed how the industry is on the precipice of major advances in innovation and technology, such as blockchain.
As Brendan Bourke, CEO of Port of Melbourne, observed, “There is a very long supply chain from the customer to the ship and the fundamental steps haven’t greatly changed in years.”
Maersk’s Managing Director Oceania, Gerard Morrison, said blockchain can replace the current process of more than 20 steps with a three-step process.
Maersk is working with IBM to examine how blockchain could replace paper documentation. The goal is to streamline the supply chain, reduce time and costs, and enable more secure global trade. Three of its clients in Europe and the US are participating in Maersk’s Global Trade Digitisation pilot. A beta version will be launched soon.
Sophie Gilder, Head of Blockchain for the Global Innovation Labs at the Commonwealth Bank, explains that the pilot echoes the learnings from the Commonwealth Bank’s blockchain experiment last year.
"Working with Brighann Cotton and Wells Fargo, we undertook the world’s first global trade transaction on blockchain between two independent banks. We built an unbroken digital thread between origin and destination to capture efficiencies by digitising the process and automating actions based on data."
Gilder added that bringing together transaction parties and siloed data to securely share information cuts significant time. "Having one trusted document made it easy to reach agreement. Our experiment incorporated Internet of Things sensors. These provided information in real-time about the underlying cargo, connecting operational flows with financial and contract information."
Paper isn’t fraud proof but replacing paper with a trusted digital record lowers risk and reduces fraud. Combined with the live information, there’s greater transparency and certainty.
At the Commonwealth Bank we approach blockchain by forming a minimum viable ecosystem to solve a particular pain point. If people can see an immediate benefit, the business case is proved instantly. This ‘do it small and do it today’ methodology of having a small section working well is worth 1,000 meetings.
It suits the shipping industry where the key challenge is the number of participants and touch points involved.
Additionally, technological advancement across countries differs. This necessitates a period of hybrid technology, hence the need to ensure that blockchain prototypes can 'speak' with other systems.
Maersk’s biggest customers and European industry groups are now approaching governments and authorities about what needs to change and urging them to work together on blockchain solutions.
Blockchain has been described as an Internet of Value. Today, payment rails are completely separate from ownership registers. Blockchain brings together the digital asset token and the payment token. It enables seamless transaction settlement in seconds.
"The blockchain does things in a far faster and easier way," concluded Morrison. "The implications and the possibilities are infinite and no one has been able to quantify the limits.”