Blockchain Shipping

by Brooke Hughes

Improving efficiency, transparency, and cost amongst shipping companies is imperative for success. However, fraud and human error can occur throughout the process. More and more shipping companies have started to adopt blockchain shipping to ensure the success they need.

What Is Blockchain Shipping?

Blockchain shipping technology, also known as distributed ledger technology (DTL),  is used in numerous industries, including logistics and transportation. It is a decentralized database that allows for an uncompromisable and unchangeable record of transactions.

David Chaum, a doctoral candidate at the University of California, Berkeley, first introduced the idea of the technology in 1982. Chaum proposed the idea of a blockchain database in his dissertation on computer science.

It wasn’t until 2009 that Satoshi Nakamoto invented and used the first blockchain technology. Nakamoto is a pseudonym for the creator(s) who also invented the cryptocurrency, Bitcoin.

How Does It Work?

How blockchain technology works can be broken down into three steps:

 1.  Record the transaction: A blockchain transaction shows the movement of any assets (such as money, packages, and documents) from one party to another.

 2. Gain consensus: Most participants or stakeholders must agree that the recorded transaction is valid in a blockchain network.

3. Link the blocks: These transactions are then written into blocks equivalent to the pages of a ledger book. What links these blocks together? A cryptographic hash is used as a chain to detect if any blocks have been modified. The cryptographic hash provides detection of any tampering. This constant verification helps to strengthen the created blockchain.


A crucial facet of blockchain technology is smart contracts. Smart contracts are programs that run on networks and automatically execute actions such as customs clearance, delivery confirmations, and payment settlements.

How Does It Compare To Traditional Methods Of Shipping?

Blockchain technology is more beneficial than traditional shipping methods due to the constant tracking of every movement made throughout the shipping process. It helps reduce not only human error but also fraud and manipulation. Smart contracts allow for transactions to be automated rather than manual, overall modernizing operations.


Key Features Of Blockchain

Blockchain shipping has key features of streamlining operations and enhancing traceability. To ensure the security and integrity of shipping data, the technology provides immutable records of all transactions and events. So, in the event of shipping goods from one point of origin to the destination, a package is tracked every step of the way. Real-time monitoring allows stakeholders to identify any errors, delays, or potential fraudulent activity.

Another key factor making blockchain technology efficient is that it is decentralized, meaning that it does not involve just one entity controlling all aspects. Each stakeholder plays a pivotal role in ensuring that all processes are credible.

Implementing Blockchain Shipping

Understanding and integrating blockchain technology into shipping companies can be complex. Merging the technology with existing technological systems may take time, as operations disruptions and compatibility issues can occur.

However, some blockchain platforms are designed for difficult integration. Shipping companies that adopt blockchain shipping must consider another important factor.

Businesses must facilitate relationships with other carriers, logistic providers, and stakeholders to implement blockchain technology successfully. Since blockchain shipping is a decentralized system, collaboration in the shipping ecosystem is crucial.

Cost Savings And Efficiency Gains

Due to its efficiency, blockchain shipping can minimize costs in numerous ways. Streamlining processes and using tools such as smart contracts reduce the need for manual intervention in documentation and paperwork, cutting administrative costs. Small contracts also allow for improved cash flow due to automated transactions, reducing short-term financing.

Mitigating fraud can help reduce the overall cost of fraud prevention and resolution, which can be expensive. Faster transactions through small contracts allow for improved cash flow and minimizes short-term financing.

Blockchain technology’s real-time tracking will enable companies to optimize inventory levels and reduce excess inventory holding costs.

Blockchain shipping technology can provide long-term benefits to a shipping company. That’s why it is crucial for a shipping company considering implementing blockchain shipping to look at the potential return on investment (ROI), which can be high if used successfully.

Real-World Examples Of Blockchain Technology

Bitcoin, the cryptocurrency founded by Nakamoto, is the first to utilize blockchain technology since its start in 2009. The network has not experienced data breaches or human errors in 15 years.

Maersk, one of the world’s largest shipping companies, implements the technology into its shipping and transportation processes to streamline its services and prevent fraud or errors.

In January 2018, Maersk partnered with IBM to create TradeLens, a blockchain platform for global supply-chain management. However, it shut down in 2023 due to its focus on short-term returns and the need for supply-chain innovation.

Two other major shipping companies, UPS and FedEx, are members of the Blockchain in Transport Alliance (BiTA). The Alliance promotes the implementation of blockchain technology in the freight industry. UPS and FedEx use blockchain to improve logistic processes such as tracking shipments.


If the freight industry adopts blockchain shipping, it will lead to increased benefits not only for the individual companies but also for the supply chain. As more companies implement this type o f shipping, the transportation industry will ultimately become more competitive, advanced, and efficient.

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