**3. The BMSCS conceptual framework**

Bockchain in maritime is a far broader system than cryptocurrency-based electronic financial transactions mechanism. In literature, it is named as Blockchain-based


### *On Maritime Digitalization in Emerging Environments DOI: http://dx.doi.org/10.5772/intechopen.104185*


#### **Table 3.**

*Available ICT&S in the examined maritime organizations.*

**Figure 2.** *BMSCS key components (source: Own).*

Maritime Supply Chain System (BMSCS) [18]. It includes smart contracts and payments, tracking and tracing cargo, empty containers placement, early risk assessment, and services that can create new added values in maritime (**Figure 2**).

Maritime is an indispensable link in global supply chains. Hereof, blockchain technology is likely to become unavoidable in shipping and port management, in striving to optimize global supply chains and make these more efficient and effective. The BMSCS should reduce the volume of administrative work, errors that occur due to manual work, delays in the delivery of goods, and consequently overall costs of transportation and delivery of goods. Due to some studies, the costs of global supply chains should be reduced by approximately 15% by implementing blockchain technology [19].

In addition to these advantages, blockchain also has certain disadvantages. Maritime sector is generally risk-averse, tending not to be an early adapter of new potentially risky technology [20]. Some stakeholders in maritime want to keep their data secret, since "competition is fierce" and "a lot of industry actors are basically competing with the same service" [21]. In other words, some partners in the supply chain consider information as a competitive resource and are unwilling to share them. Positional data might be used to track vessels by identifying port locations, fueling locations, and routes [22]. This is particularly the case with tracking dangerous and hazardous goods, pharmaceuticals, or food. The use of blockchain does not guarantee that the information recorded in ledgers is correct and does not prevent tampering data prior to entering it into blockchain ledger, e.g., the contents of a container, fuel production, testing or combustion, and the like [23]. Due to the huge amount of data and traffic generation, including data storage, blockchain requires a wideband like G5 or G6 [24], while the internet speed can be low when the working stage is offshore. Further, blockchain causes high-energy consumption [25]. Blockchain in the maritime sector indicates the potential to reduce transaction costs in a number of areas, including reducing the need for intermediaries such as brokers and courier services and reducing related financial expenses and energy costs. However, one should not forget that this does not include the costs of the overall investment and expenses associated with blockchain implementation and adoption, especially in developing or emerging economies [26, 27].

The present level of awareness, knowledge, and expertise about blockchain is scarce among the stakeholders. Therefore, educational, training, or capacity-building programs are necessary at regulatory, administrative, and operational levels. Higher level of standardization across the global supply chain is necessary as well. The Digital Container Shipping Association (DCSA) conducts efforts in this regard, but further, more extensive, actions are necessary. In general, there is a hesitation by stakeholders in maritime sector to invest in blockchain systems in terms of technological integration, regulatory, organizational, and educational costs, since the maritime sector traditionally relies on its legacy systems. There appears to be a gap between what practitioners in the blockchain area suggest and what has been a range of state-of-theart approaches in software engineering and information security research and practice [28]. Furthermore, the major liner shipping companies are the most likely parties to benefit from blockchain regarding the complexity of their blockchains and huge requirements on financial resources [29]. This can put other potential actors in the global supply chain at a disadvantage. The last but not the least, the basic attitude should be that technology, in this case, blockchain on the top of the global supply chain should improve the human condition, and not replace humans [30]. Therefore, human and ethical dimensions of blockchain technological development and more extensive deployment, should not be neglected.

In the following text, we shall present blockchain framework in maritime at the example of two applications: TradeLens and Blockshipping. TradeLens is used for tracking and tracing cargo along the global supply chain, early risk assessment, smart contracts, and value-added services created through an open platform. Blockshipping is used for empty containers' optimal placement by autonomous intelligent software agents.

#### **3.1 TradeLens**

TradeLens is a new business model in shipping and port management. It enables one-to-many connections for all the actors, all individuals that are involved in a global

#### *On Maritime Digitalization in Emerging Environments DOI: http://dx.doi.org/10.5772/intechopen.104185*

supply chain instead of bilateral connections. Everybody come together in a maritime industry-neutral, open platform for every participant [31]. Maersk, the world's largest international container shipping and logistics company, and IBM the technology leader in blockchain came together to provide a new, open platform solution underpinned by blockchain to help unlock some of the opportunities for a more efficient global supply chain. Maersk and IBM have a long history of working together, actually decades. In March 2017 these organizations collectively try to improve global trade through digitization. In January 2018, they launched an early adapter program; trials began, and in August 2018, they formally launched the TradeLens limited availability platform, shared among 92 participants. In December 2018, TradeLens is commercially realized, along with 1.5 million events per day published to the platform. Some types of these events are presented in **Table 4**.

The platform can track 120+ unique consignment shipments, while 60+ network members are onboard or in a process of accessing. TradeLens supports 18+ unique, standardized, trade document types. Some of these documents are listed in **Table 5**. In February 2019, enhanced document sharing, permissions, and notifications were released. The platform includes half a billion events on annual basis and this number grows with more and more network members.

More than twenty million containers of cargo information are in the system today, which is roughly 1/5 of global trade and it is growing. The platform involves numerous parties and systems: ocean carriers, ports and terminal operators, inland carriers, shippers, consignees, beneficiary cargo owners, freight forwarders, 3PLs, custom authorities, government agencies, financial and insurance services, transportation management systems, Port Community Systems (PCSs), supply chain validity systems, supply chain, manufacturers, retailers, etc. They all collaborate and share information. TradeLens provides them with comprehensive, real-time visibility and immutability across the end-to-end journey of shipment. In other words, data is available immediately, along with the single simplified view across all shipments.



#### **Table 5.**

*TradeLens standardized documents.*

For instance, a terminal operator publishes a piece of information about the fact that a container has been loaded onto a ship that becomes immediately available to everybody else in the supply chain. The idea is to build workflow based on smart contracts using chain code to derive cross-organizational workflow by excluding manual work.

Blockchain on which the platform is based, enables the trust in data that are available on the platform. It is an open and censorship-resistant distributed database model, secured by encryption and decentralization. Blockchain records information in blocks on a shared ledger, storing a synchronized copy of it on all the systems participating in the network, hence assuring its immutability. The trust anchors, which are the blockchain nodes, ensure through consensus algorithms that the information should be written on the platform as approved like valid. All information are auditable, verifiable, and temper proof; so, as soon as a piece of data is published to the blockchain it cannot be edited. The only way to edit a document is to create a new version of the document. Consequently, all the documents are fully auditable. Additionally, cryptographic hash of the data is written to the blockchain, and this is a part of the supply chain. It is important to say that private data remain private. TradeLens as an information-sharing model allows ecosystem partners to have access to the information they should access and vice versa. The platform offers a high level of flexibility through application of RESTful APIs (Application Programming Interfaces), back-end ERP (Enterprise Resource Planning), and secured front/back-end web services.

In the middle or at the very core of TradeLens solution, there is the platform and blockchain behind it. Below the platform is the network. The network is not a physical network. It is a set of entities that provide the data, including the data itself. The ocean carriers, ports, terminal operators, customs, shippers, inland transporters, etc., provide the data. On the top, above the platform are applications and services, i.e., RESTful APIs, back-end ERP, and secured web that enable people to exchange information. These are based on open published industrial UN/CEFACT standards that are defined at the platform level, so that third parties are allowed to build new valueadded services and applications. This is the basic kind of model, through which TradeLens is moving forward as a paradigm shift in information sharing across the whole ecosystem. A conceptual framework of TradeLens as a blockchain-based solution in the global supply chain is presented in **Figure 3**.

*On Maritime Digitalization in Emerging Environments DOI: http://dx.doi.org/10.5772/intechopen.104185*

**Figure 3.**

*TradeLens conceptual framework (source: Own).*

What kind of information is shared across the platform, i.e., over the entire supply chain? This information is mostly shipping milestones. The information on: has a container been staffed; has the container be gated; what is the estimated time of arrival (ETA) of the container at the destination, and so on, are in fact shipping milestones. However, it is more than that. It is also the documents in maritime, both structured and unstructured (like PDFs, scans, images, etc.), by making them available to the participants along the supply chain. The documents need to change 'hands'. They need to be approved, updated, and available to build workflow using smart contracts, like the bill of lading, clearance, insurance, etc. This is powerful in terms of driving cross-organizational data flow in maritime.

Within TradeLens, there is sensor data and IoT for referring to the container number, electronic seal, temperature inside it, for instance, etc. All of that is part of the underlined data that is made available to the participants who need that data. There is a whole concept of seamless and permission data-sharing model that is built on the base: what your role is, i.e., are you terminal, ocean carrier, shipper, inland transporter, etc. The default permission model allows people to share information, so that information is made available to those who need it, but it is not available to those who should not see it.

TradeLens is of utmost importance whenever planned actions turn into unplanned. For instance, the ocean carriers' decision has implications not just for them but for all stakeholders further down the supply chain from customs brokers, port authorities, and terminal operators to inland transporters and consignees. With TradeLens, changes to the shipment are reflected immediately allowing supply chain participants to coordinate actions tightly, delivering the consignee's inventory in time. TradeLens allows nearinstant logistics adjustments so the disruptions are kept to a minimum. Global trade is

an incredibly complex system, but TradeLens and blockchain create an industry-wide and innovative solution to alleviate this complexity and related impediments.

### **3.2 Smart contracts**

Smart contracts are programs stored on a blockchain that run when predetermined conditions met. They are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without an intermediary's involvement or time loss. They can also automate a workflow, triggering the next action when conditions are met [32]. Smart contracts work by following simple "if/ when ( … ) then ( … )" statements that are written into code on a blockchain. In the other words, a smart contract presents the lines of code that are stored on a blockchain and automatically executes when predetermined terms and conditions are fulfilled [33]. A network of computers executes the actions when predetermined conditions have been met and verified. These actions could include releasing goods, funds, or confirmations in maritime supply chain. The blockchain is updated when the transaction is completed. That means the transaction cannot be changed, and only parties who have been granted permission can see the results. Blockchain network controls access. Within a smart contract, there can be as many stipulations as needed to satisfy the participants, so that the task will be completed correctly. To establish the terms, participants must determine how transactions and their data are represented on the blockchain, agree on the "if/when ( … ) then ( … )" rules that govern those transactions, explore all possible exceptions, and define a framework for resolving disputes. Then, the smart contract can be programmed by a developer, although organizations that use blockchain for business, provide templates, web interfaces, and other online tools to simplify structuring smart contracts. Key benefits of smart contracts are speed, efficiency, accuracy, trust, transparency, and security (blockchain transaction records are encrypted, which makes them very hard to hack; plus, each record is connected to the previous and subsequent records on a distributed ledger, and hackers would have to alter the entire chain to change a single record). In maritime supply chain, sea waybill or bill of lading can be converted into a smart contract, while it requires an agreement between shipper and carrier, and/or any other relevant and permissioned parties to view the consignment, transport equipment, and documents, as permissions allow [34]. The benefits of such smart contract include simplified transmission of shipping instructions; management of document status and versioning; faster submission of shipping instructions for creation of final bill of lading; quick sharing of documents with all permissioned parties; including immutability, traceability, and auditability of the documents involved.

## **3.3 Blockshipping**

Today the container shipping industry accounts for around 60% of all the world seaborne trade. This valuable industry has been troubled for years by challenges like overcapacity, low freight rates, security threats, and increasing environmental regulations. Currently, there are about 27 million containers in the world, which are moved from one destination to another on trucks, container cars, ships, rail, or waiting in the port, container yard, railway station, and the like. About 5 million containers are uncontrolled and nobody knows their precise locations; if they are currently in transit or waiting for collection. Consequently, no one knows if they are empty or loaded, which means that no one knows if a truck or a train is wasting time and energy

carrying an empty "metal box" instead of carrying goods [35]. This is a huge waste of energy; it produces additional costs and negatively affects the environment.

Therefore, the global shared container platform (GSCP) is currently under development. As the world's first blockchain-based container registry, it will allow the industry to help real-time track all containers worldwide. The platform will enable the industry players to manage efficiently all kinds of transactions related to container handling. The GSCP has several user groups like shipping lines, leasing companies, banks, financial institutions, blockchain container investment syndicates, transport service providers, beneficiary cargo owners (BCO), container terminals, container depots, repair shops, etc.

Through a secure login, each user group will have a unique set of functionalities that matches their exact needs. For example, if you are a shipping line export user, you can use GSCP platform to find street turn matching opportunities for ensuring that empty containers meet export demands. You will see an inventory list of all export bookings, which require an empty container to the customer location for stuffing, rather than transporting an empty container from the port or the depo. For convenience, the platform enables users to switch between list and map view. The user can apply one or more filters and inventory will update accordingly, for instance, only showing FEUs (40-feet units). Any set of applied filters can be saved in user's filter presets. This way they are quickly accessible whenever the user needs them. Matching export containers with import containers is easy and swift. This enables both importer and exporter to save an empty container haulage trip, plus gate in and gate out fees at the terminals. The system identifies possible matches based on container size, type, boarding date, previous commodities carried, and availability. The platform also enables sending a request to the involved shipping line with the comment. The GSCP provides various ways to import booking and container data. The user can use EDI and API connection with the in-house booking or order platforms [36].

Blockshipping is, in fact, a shared pool of containers, which enables a "just in time containers" situation. Today more than 40% of all containers in transport are empty. Therefore, resources are wasted and costs are increased. With Blockshipping saving potential for the shipping industry might be at least 5.7 billion USD and reduction of CO2 emission can be 4.6 million tons yearly [37]. Blockshipping platform is a part of the so-called programmable economy. In such an economy, the interactions among different parties will not occur through mediation of a third trusted party, but automatically through autonomous intelligent software agents (AISA). These are also called dApps (distributed Apps) that run on blockchain and are authorized and instructed by the parties involved in the BMSCS to negotiate autonomously on their behalf.

Four key subsystems of Blockshipping are [38]:


• Smart Contracts (SC) that can be treated as rental contracts established through autonomous negotiations, which persist on the blockchain and govern the rental through binding self-enforcing rental agreements.

Blockshipping has developed a unique revenue-sharing model, while it issues two types of tokens:


The CPT will be used for clearing and settlement of transactions between the users of the platform. These transactions will relate to many different services and fees. A percentage of the revenue goes to a revenue share pool and is passed on to the owners of CCC tokens. Blockshipping exchanges the CPTs in the revenue share pool to Ether via USD. Then, Blockshipping uses smart contracts to convert revenue Dutch auction on the Ethereum blockchain in which Blockshipping offers the owners of the CCC tokens price for their tokens. The offered price will increase until all available Ethers are spent. After the auction, Blockshipping distributes the acquired CCC tokens to all the owners of CCC tokens on a pro-rata basis. In this way, token owners are rewarded regardless of their decision to sell or keep their CCC tokens [39].

The processes flow within Blockshipping is based on several simple and fully automated steps. The easiest way to make an explanation is to follow an example. Let us assume that the shipping line needs to rent a container to transport goods from Nairobi (Kenya) to Rotterdam (Netherlands). Blockshipping empty container repository engine identifies the best-positioned empty container in Nairobi and informs the shipping line about the options. The shipping line informs its autonomous intelligent software agents (AISAs) about the containers. The rental negotiations then happen unsupervised between the shipping line and the container owner through their autonomous agents. The agreements established by AISAs are persisted on blockchain in smart contracts that govern the rental in binding self-enforcing rental agreements. Blockshipping container platform tokens CPT are used to pay rental fees, while the fees are transferred from the shipping line wallet, in accordance with the smart contract and reserved payment. Smart contracts can be changed if conditions change. For example, if the rental period is extended when the container reaches its final destination in Rotterdam. Then, the smart Oracle blockchain enforces the smart contract. The rental ends and releases CPTs to the container owner's wallet [40].

In addition to TradeLens and Blockshipping, there are a number of other blockchain applications in maritime. Some of these are given in **Table 6**. Concerning safety issues, semi-private blockchains are common. The consortium companies' reputation speaks, in fact, about safety. Maritime, as conservative, assesses and recognizes the quality of operation in long run. As we said previously, stakeholders in maritime are not early adopters. However, trust between network participants is a bigger problem than safety. The blockchain is an unorthodox technology and cryptocurrencies are still highly volatile. In such a setting, maritime stakeholders do not like to disclose essential business information about customers, suppliers, and cargo. Many freight forwarders and intermediaries, e.g., earn their profit thanks to information asymmetry. Interoperability will be a smaller problem in terms of technology (since standards have been developing) than in terms of trust and smooth process flows at (inter-)organizational level.


#### **Table 6.**

*Some blockchain applications in maritime.*

#### **3.4 Case study on blockchain adoption**

Within this case study, we explored how maritime stakeholders in two developing countries, South Africa and Montenegro, perceive blockchain technology and its implementation in maritime. Through the methodological framework given in [26, 27] we conducted the survey, which included thirteen closed-ended questions, or statements on blockchain adaption. Concerned statements included the following blockchain dimensions: knowledge, infrastructure, standards, experts, diverse stakeholders, government and regulatory policy, social influence, loss of jobs, computing and storing capacity, complexity, opportunistic behavior, sharing information, and security. The respondents were from maritime companies, agencies, research organizations, governmental bodies, insurance companies, and universities. They are from the executive management level in industry and governmental bodies, and active researchers, professors, and lecturers from universities (10 from South Africa and 10 from Montenegro, all with more than 5 years of research experience). The respondents have had to express their (dis)agreement with the proposed statements via Likert 1–5 scale, where 1 represents the lowest level of (dis)agreement, and 5 the highest level of (dis)agreement. The rest of the offered numerical values are respectively in-between these two extremes. The statements and average values of assessments are given in **Table 7**. If the average score per group of respondents is between 1 and 2.5, then the level of (dis)agreement is "low"; if it is between 2.6 and 3.5, then the level of (dis)agreement is "moderate", and if it is between 3.6 and 5, then it is "high".

Five statements with the highest "agree" and "disagree" assessment rates are categorized in different PESTEL (political, economic, social, technological, environmental, and legal) dimensions, along with their rank (**Table 8**).


#### **Table 7.**

*The assessments of blockchain adoption.*

The respondents consider awareness and knowledge about blockchain as a social dimension of the highest importance for its adoption in maritime. This is understandable, since knowledge is the biggest asset; the only one which grows with exploitation during the time. On the second place is infrastructure, which falls under technological dimension. This is reasonable since, without it, blockchain adoption is practically impossible. In the third places are favorable government and regulatory policies that fall under political and legal dimensions. This is of crucial importance since economic development in South Africa and in Montenegro is controlled by the government. On the fourth place is experts' knowledge, which belongs to the social dimension of PESTEL model, and which is to a certain extent connected with awareness and knowledge, but it can be outsourced in the case of its lack, and under the assumption that awareness and general knowledge about blockchain are in place. The fifth place is the hesitancy of sharing information among the parties, and it falls under both economic and environmental dimensions of PESEL. This is understandable, since once blockchain becomes well established; the impact of this issue will be reduced.

The highest disagreement is observed regarding 'simultaneous' presence of blockchain complexity and observability. Majority of the respondents show suspicion


*- Constructs marked with '\*\*'correspond to three different PESTEL dimensions.*

*Source: Own.*

**Table 8.** *PESTEL analysis.*

regarding this paradox. Furthermore, the respondents do not agree with the statement that blockchain will reduce opportunistic behavior. South Africa and Montenegro are countries that are for decades in transition and suffer from the permanent reproduction of crisis. Consequently, the responders' rather skeptic attitude towards this statement is completely understandable. The social influence is in the third place. The respondents do not believe that society can affect considerably the implementation of this advanced technology, and this belief is based on their experiences from transitional settings. The statement, which deals with the standardization issue, is "negatively" assessed, but it might be the case due to the experts' belief that standardization must be achieved and that it cannot as such threaten blockchain key advantages. The need for ensuring privacy and security is assessed negatively. This means that some respondents strongly disagree with the statement that blockchain technology is still immature and vulnerable. Due to their response, one can conclude they believe that blockchain technology is at a high level of development and that is less vulnerable than it can appear due to its complexity and deployment at a global scale. This construct can correspond with technological, environmental, and legal PESTEL dimensions at the same time.

Since we collected only twenty survey responses, further research should include in-depth interviews or a survey upon a larger poll of experts and profound discussion on the respondents' assessments, including comments and suggestions. In addition, the following investigation in the field should include experts from other developing and transitional countries (besides South Africa and Montenegro), including a longitudinal approach. Building new knowledge and transfer of existing one on blockchain technological and other crucial dimensions are necessary, particularly in developing countries, which suffer the lack of skilled personnel and expert knowledge, dominantly in the technological domain.
