Malta: Smart Shipping

Last Updated: 25 September 2018
Article by Adrian Attard

Blockchain technology offers the opportunity to make shipping paperless, says Adrian Attard.

Malta is fast becoming a centre for Distributed Ledger Technology (DLT) businesses. Its efforts to become a global hub in this sector culminated in the enactment of three new laws earlier this year. This new legislative framework seeks to create a regulated environment within which this sector can function and thrive in.

However, despite the buzz generated by blockchain, many people are still not sure what this technology really means and more importantly, how it can transform and revolutionise so many different industries, including shipping.

At its core , blockchain is a decentralised and distributed digital database. This means that different parties can share and update the same information online in real time, naturally depending on authorisation rights. There is no need for a central administrator. To simplify matters, imagine a spreadsheet. Rather than having one person regularly update it, here the spreadsheet is duplicated across a network of users (also known as 'nodes'), who are regularly updating the spreadsheet.

Thus, whereas most centralised databases keep information up­to-date at a particular moment, data held on a block chain exists as a shared database which is constantly being updated and reconciled in real time as new sets of 'blocks' are added to it. Each block contains a timestamp and is linked to the previous block, forming a chain of information. Naturally, while the information can be accessed by all, not all users can add a new entry to an existing chain. To do so, they must have a special cryptographic key.

Decentralised data arguably also provides more security as it becomes harder to manipulate the information in the ledger. By way of example, imagine your bank maintains a central database of all its customer details and transactions. When you withdraw money or transfer funds , your bank updates its records in its database. If a hacker manages to access to this centralised database - they can change balances and change transaction details at will. However, with blockchain, this would not be possible as there is no centralised database. All the users have real-time access to the data. Any manipulation would require the same change being made on all copies of the distributed ledger at the same time, which is highly unlikely.

Most people associate blockchain technology with banking and cryptocurrencies. Perhaps this is a result of the fact that these two industries were the first to identify the enormous potential of this technology and have invested so heavily in it. However, blockchain as a secured, decentralised and encrypted ledger is being explored by other sectors and the shipping industry is no exception.

Shipping remains to date a paper-intensive industry, with most transactions dependent on the use of paper documents such as sale contracts , charterparties and bills of lading. Some of these

documents may also need to exchange hands several times. For instance, traditionally a bill of lading is issued at the port of loading in favour of the shipper. It may subsequently need to pass on to several banks before ultimately reaching the receiver. The process can be so time consuming that sometimes the cargo arrives at the port of discharge before the bills of lading do.

Blockchain technology offers the opportunity to turn shipping paperless, by means of which all the key stakeholders - including shippers, receivers, carriers, charterers, banks, terminals and customs officials - may contract, exchange or store information in encrypted format, give and accept instructions and securely effect payment exchanges. Every party involved in a transaction may access any of the relevant trade documentation in real-time, with the peace of mind that these have not been tampered with. By doing so, the use of blockchain technology promises to simplify current shipping processes, reduce costs, provide more time-efficient solutions and also offers a securer way of trading.

Blockchain technology may also revolutionise the shipping industry through the use of smart contracts. These electronic contracts are essentially drawn up by a computer programme which is intended to facilitate negotiations and execute agreements between parties. Additionally, they also aim to self-enforce or perform the obligations when certain pre-defined conditions are met. For instance, automated payments could become self-executing under a smart contract once the performance of the obligations therein is carried out.

It will be interesting to see whether the industry will embrace the use of smart contracts. In shipping, most transactions are carried out using standard­form contracts and thus, much could depend on how well these contracts can be coded or transposed into smart contracts.

The potential that blockchain has to transform shipping operations into more efficient and profitable enterprises is already being recognised by a number of big stakeholders in shipping. Indeed, over the last couple of months , we have seen a number of ambitious projects go live.

Container shipping giants A.P. Moller-Maersk have teamed up with IBM and recently launched their blockchain trade platform TradeLens. This platform aims to connect all parties involved in the shipping trade and enables them to interact efficiently and access real-time shipping data. It will enable participants to also digitalise and exchange trade documentation using a module, called Clearway, which will also allow for the use of smart contracts and automated processes, such as import and export clearance.

In layman's terms, this technology will allow multiple trading partners as well as authorities to establish a single shared view of each transaction. Shippers, carriers, freight forwarders, terminal operators and customs authorities can interact more efficiently through real-time access to shipping data and shipping documents.

Blockchain-based startup CargoX recently also successfully carried out its pilot shipment for the first ever smart bill of lading. The test trail saw shipments of garments arrive in the port of Koper from Shanghai, China on August 19, 2018. CargoX claims that its services can reduce the costs associated with issuing and processing bills of lading by up to 85 percent, as well as save time and provide a more secure way of shipping cargo.

The likelihood is that widespread acceptance of blockchain technology in shipping will not happen overnight. There are still a number of challenges which will need to be overcome, primarily the need to ensure that the law supports the technology and also protects the legitimate interests of so many parties' involvement in the maritime chain. Another important factor will certainly be the willingness of public authorities to embrace and use this technology. We must therefore patiently wait to see as to what extent the shipping industry can take advantage of blockchain technology.

Originally published by Times of Malta.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Adrian Attard
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions