The bane of international shipping is not regulation. It is paperwork. Regulation is a problem, but every new regulation generates a ton of new paperwork. Ask anyone involved in international shipping and they will tell you what a nightmare paperwork is. But there may be a solution on the horizon. That solution is blockchain.
You might already be familiar with blockchain in relation to cryptocurrency. While it is true that blockchain was born from Bitcoin, its capabilities far exceed creating digital tokens and selling them on exchanges. Blockchain is functional to the point that it can do some pretty amazing things. It can do a lot for international shipping.
A Distributed Ledger System
For all intents and purposes, blockchain is a distributed ledger system. The machinations of cryptocurrency illustrate it simply enough. In the cryptocurrency world, digital tokens are created by computer code. Whenever those tokens are traded, be it by buying, selling, or facilitating business transactions, the trade is recorded in the cryptocurrency’s ledger.
What must be understood is that the ledger is immutable. What does this mean? It means that once entries have been confirmed and finalized, they cannot be modified. Blockchain creates a permanent record.
As for the ledger being distributed, multiple copies of the ledger exist on various computer servers. Every transaction needs to be entered into each ledger before it can be finalized. Furthermore, all the ledgers must agree, or the transaction is abandoned.
Digitized Shipping Documents
How does any of this help international shipping? By converting paper documents to digital copies, those documents can be represented as entries in the blockchain. Let us say you have a shipment going overseas via DHL Export Express. All the export documentation is completed and filed electronically. Once verified and made a permanent part of the blockchain, it cannot be altered.
This is a big step in that immutable digital documentation would greatly reduce the number of paperwork errors that could possibly occur between the time a shipment leaves its origin and arrives at its destination. Right now, according to authorized DHL reseller Preferred Shipping, errors with paper documents are commonplace.
With blockchain, there is no longer a need for multiple parties along the logistics chain to verify documentation. Export documents only need to be completed and verified once. After that, they become permanent records.
Taxes and Duties Are Simpler
There is another benefit here, a benefit rooted in blockchain’s history as a means of facilitating digital payments. Imports and exports are generally subject to duties and taxes. The same distributed ledger that can keep track of shipping documents can also be utilized as a payment platform. The same kind of immutable record would be generated every time duties and taxes are paid.
There would never again be a question about whether payments were made. There would never be questions about how much was paid or who collected payment. Everything contained in that blockchain ledger would constitute a permanent record that cannot be altered.
Extremely Difficult to Hack
The icing on the proverbial cake is that blockchain is extremely difficult to hack. It is not impossible, but the way distributed ledgers are designed inhibits hacking by requiring consensus among all copies of the ledger. So it is very hard for a hacker to take control of one ledger and then use it to hack the entire system.
Blockchain is currently being investigated as a possible digital replacement for paper shipping documents. If somebody manages to get it into international shipping, it will not stop at just digital documents. It will completely revolutionize the entire system.