March 13 ------ Israel Ports Company has begun pilot testing a system for transferring bills of lading using blockchain technology. The Israel Ports Company, which develops and operates the Israeli Ports Community System (IPCS), says the electronic bill of lading will constitute a significant step up in port technology by enabling a more rapid release of cargo and by saving time and the cost of using courier companies. The technology is also expected to prevent forgeries and documentation delays.
A bill of lading is a document issued to the exporter by the marine shipper to confirm the receipt of cargo for shipment. An importer who presents a bill of lading can obtain a delivery order, with which the cargo can be released from the port. In some of the shipments for which a letter of credit is required, banks in the export and import countries are involved. Israel Ports Company is a member of the International Port Community Systems Association (IPCSA) and leads the project on the association’s behalf. The project creates a joint database that can be viewed by all authorized parties who participates in the same transaction, without using any kind of paper documents. Discussions around adopting blockchain in the shipping and trade sector often suggest that today’s supply chains are all about paper and that blockchains are the technology that could change this. However, IPCSA says the electronic networks and services provided by Port Community Systems already enable between 90 and 99 percent of all import/export processes to be paperless transactions.
IPCSA members started a blockchain project, and having analyzed the challenges, opportunities and processes that blockchain can help to deal with, they agreed that merely switching an existing digital process to blockchain technology would deliver no significant benefit. Instead, the decision was taken to focus on a paper-based process and, after some consideration, Bills of Lading were the chosen target. The following stakeholders participated in the processing of the first bill of lading through the system: ZIM Integrated Shipping Services Ltd (which was the first company in the world to present a blockchain-based electronic bill of lading and which currently offers a similar service with this technology, but using a different platform); Adama (a crop protection companies and one of Israel’s largest exporters); Damco Logistics (the freight forwarding and Customs brokerage company) and PPL 33-35 (which operates the Port Community System in the Ukraine).
In the framework of the pilot, a bill of lading was electronically issued by ZIM, transferred to the exporter and then to the importer in Ukraine. The system provides information as to which party holds the electronic bill of lading at any time, together with the logistic status of the cargo (its entrance to the port, its loading on the ship, etc.) The project has additional participants from around the world which will also trial the technology in the near future. There are other projects underway in Israel. Last year, Israeli-based blockchain start-up LogChain completed its first full cycle of an international blockchain-backed maritime shipment.