Using blockchain, Israel’s Zim eyes sea change in musty shipping sector
A pilot program for an electronic bill of lading is set up together with US firm Sparx Logistics and Israeli startup Wave
Haifa-based shipping giant Zim Integrated Shipping Services believes it is about to revolutionize the maritime shipping industry, bringing the blockchain technology to a market that is still tied to 17th century codes and customs.
The shipper has successfully experimented with a blockchain-based “paperless trade tool,” allowing the secure exchange of original documents, the company announced on Monday. The pilot program, calling for an electronic bill of lading — the key instrument of global shipping control — was completed through a collaboration with US firm Sparx Logistics and Israeli startup Wave Ltd. This represents the first test of its kind for an ocean-based shipping company.
The test consisted of three containers being shipped from China to Canada, with US-based Sparx shipping the containers, and Wave having developed the blockchain application.
Zim developed the solution after “a long market analysis,” the company said in a statement, and is convinced that “Blockchain technology and the Wave application can be the solution that will drive the trade to the digital era.”
The firm’s new CEO, Eli Glickman, said in a statement that he was “proud that Zim leads the way in introducing Blockchain technology to the shipping world.”
“Promoting innovation and technology in our industry is an integral part of Zim’s vision,” said the shipper’s chief information officer, Eyal Ben-Amram.
“While we are still in the process of evaluating the technology, we are confident that this type of forward-looking ideas will advance our industry as a whole towards a more efficient and modern phase.”
Blockchain is a technology in which a decentralized network of computing systems computes the authenticity of a transaction. Bitcoin — often associated with blockchain — is one implementation of blockchain in the field of currency, but there can be many uses of the technology.
Wave’s blockchain technology is based on all-party approval. That means that all actors involved in a purchase — or shipment — have to approve all payments, documents and orders. Without this the chain collapses, and the process can’t move forward.
Wave’s application functions through a “secure decentralized network,” the company said, and is free for shippers, importers and traders, requiring no IT or operational changes. The application makes sure that the digitized document remains true to the original throughout the shipment, detecting forgeries if they arise.
Wave has been campaigning to bring blockchain to the shipping industry for years.
“Moving to a digital Bill of Lading would be hugely beneficial in supporting the supply chain in general, through reduced costs, error free documentation and fast transfer of original documents,” said Wave CEO Gadi Ruschkin.
While the global shipping market has been in a decade-long funk, 2017 showed improvement across multiple fronts, as reported by The Financial Times and The Wall Street Journal.
As ZIM’s economic fortunes in this ailing market have slowly improved under its new CEO, the shipper swung to a slim profit in the second quarter of the year compared to a loss a year earlier, and technological innovation appears key.
“ZIM has decided to strengthen [its] position as a very innovative company in the trade,” said company’s chief technology officer Oded Shahar in a phone interview. “This is part of our portfolio of innovation here that we are going to introduce in the next 12 months.”
For Shahar, moments like this exemplify the innovation process, and show the spirit of the Israeli startup ecosystem beginning to impact older, more traditional markets.
“I think it will be disruptive,” said Shahar, speaking about the blockchain application. “Think of the trade industry without […] papers.”
While this is only a pilot program, and Shahar doesn’t know how long mass adoption might take, the direction, he said, is clear.
“This can be a very huge leap, in terms of digitalizing the entire process,” he said. “We believe it will be the future.”
The Times of Israel Community.