After several successful trials over the last year, Israel’s largest cargo shipping company, Zim, has implemented a blockchain platform for electronic bills of lading. According to Zim, this technology could replace paper bills of lading and further improve other activities which rely on physical means of transfer.
Zim recently conducted several transactions in which bills of lading were transferred to the receiver less than two hours from the vessel’s departure, a process that typically takes days or can take weeks. Following these successful trials and initial transactions, Zim will soon be entering the next phase, providing an opportunity for all of its customers to take advantage of electronic bills of lading utilizing blockchain technology.
Zim’s successful implementation of blockchain-enabled bills of lading, demonstrates the power of distributed leger technology to add efficiency and reduce costs in memorializing and settling financial transactions.
Ripe for Disruption
The shipping industry is increasingly looking to DLT to streamline global supply processes, improve transparency and protect against fraud. Implementation in the shipping industry would modernize an industry where the vast majority of key documentation still relies on paper forms.
As evidenced by Zim’s initial results, blockchain technology presents the shipping industry with significant advantages. Parties along the supply chain using blockchain could upload and share documents instantaneously, immutably and securely. Payments could be triggered and dispatched upon satisfaction of agreed conditions, and every participant could track and manage the shipment’s progress and documentation from end to end. Benefits include increased efficiency, increased transparency, reduced cost, and reduced risk of documents being delayed, misplaced or tampered with.
Legal Risks and Considerations
As blockchain technology continues to find its way into industries outside of its initial use (finance), new risks arise. Companies wishing to implement or participate in blockchain technology within the shipping industry should evaluate the ways in which legal risks, which are traditionally incorporated into paper-form transaction documentation, are being incorporated into the blockchain technology and that their rights are equally accounted for.