The shipping industry is switching to digitalisation to expand its horizon and enhance shipping operations. An integral part of shipping, the maritime sector is one of the primary transporters of goods internationally as it is a cost-effective and efficient means of shipping goods. Since most shipments are transported via sea, maritime security is essential. To ensure it, the International Maritime Organisation is evolving the industry with advanced technology to secure the multiple operations carried out at the maritime facilities. One of the multiple technologies used is blockchain technology which helps offer secure transactions, transparency in tracking and monitoring assets, and flow of real-time data throughout the global supply chain. The impact of blockchain on the maritime industry has provided fruitful solutions concerning maritime security. The blog highlights how integrating blockchain technology in the maritime sector has enhanced safety standards.
Blockchain technology and its role
Thousands of online transactions occur daily, with the supply chain and trade market blooming. Securing those transactions and user data becomes crucial to prevent fraud risks. Blockchain technology is an advanced way of storing and sharing databases in blocks interlinked in a chain by ‘hash’ codes. It is a digital ledger that helps decentralise the database, where the power to make any changes in the blockchain rests on the consensus of all network participants. The central role of this technology is to record and track assets and transactions in businesses. The flow of information regarding assets and transactions within the business network is safe and reliable. No modifications or changes can be made to any block without invalidating subsequent blocks. It utilises a general ledger system to offer real-time transactions from multiple platforms and consolidate them to form a single structured report. Blockchain technology, therefore, offers transparent, immutable and safer means of commerce across the globe.
Importance of maritime security
The maritime industry serves a significant part of the shipping businesses by aiding international import and export. The vessels on the voyage must be duly tracked and maintained to prevent them against any internal and external threats. Maritime threats include piracy, theft, terrorism, robbery, human trafficking and hacking servers and systems. Therefore, it becomes essential to boost naval security to minimise and prevent malicious and illegal activities. The IMO formulated the SOLAS convention as a vital training program to be deemed fit for international voyages. It aims to preserve the safety of the life of the vessel and crew at sea. Since most ports are upgrading with technology and switching to automated port terminals, systems are being indefinitely utilised for operating and tracking ships. Digitisation in the maritime industry is expanding tremendously and therefore it is vital to prevent breaches in the internal systems.
Advantages of blockchain in the maritime industry
- Security – Blockchain encrypts data and prevents unauthorised access. A copy of the information is stored on different systems rather than a single server, thereby limiting the chances of hacking into private data.
- Transparency – Real-time data entry into distributed ledgers across the business network helps track transactions and the entire history of any asset. It helps in offering enhanced transparency between all partners that are a part of the network.
- Tracking – Blockchain technology helps track the order status and share it with the stakeholders to improve reliability, boost trust, and reduce unnecessary delays.
- Smart Contracts – They help reduce human intervention in the form of any involvement of third parties during transactions. With the help of blockchain technology, after fulfilling all the contract terms, an automated transaction can be directly initiated securely.
How does blockchain improve maritime safety?
As part of the trade industry, blockchain technology has been introduced in the maritime sector to upgrade maritime security and offer substantial reliability to shippers. A few applications and impacts of blockchain on the maritime industry are-
- Real-time tracking – Shippers’ demand to know their shipment’s whereabouts during its voyage has increased. The maritime industry has evolved to accommodate blockchain technology to ensure a safer and more reliable transaction of goods. It enables immutable and dynamic real-time tracking aided by IoT in the shipping industry. It helps in monitoring of order status to maintain safety standards throughout the maritime supply chain.
- Safer transactions – All shipping transactions in the maritime industry are directed via the bill of lading. The traditional process involved documentation and hectic paperwork that consumed crucial time and slowed the shipping process. By introducing blockchain technology, the maritime industry has switched to electronic and secure modes of transactions throughout the globe. A digital signature helps shippers to share information with the receiving party, thereby eliminating third-party involvement.
- Marine insurance – Blockchain technology helps track the lifecycle of assets, including the integrity of vessels, for insurance concerns. Shippers can access the current, accurate and verified data regarding the condition of a ship by tracking its history and voyages. All the data needed between the liner shipping companies and the shipper is preserved. It is challenging to modify or change any information fed, thereby preserving data integrity and offering greater transparency to the shippers.
- Prevents cyber crimes – When using blockchain technology, the data is encrypted and immutable, therefore, minimising the threats caused due to cybercrime. Blockchain utilises preventive mechanisms such as cryptography and consensus-based decision-making to avoid data breaches and cyber fraud risks.
The trade industry functions smoothly through the dynamic transport operations of the maritime industry. The implementation of technology, especially the impact of blockchain technology on the maritime industry, has led shipping companies to ensure better safety standards for the shippers.
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