Keeping pace with blockchain in ocean transportation

This is an excerpt of the original article. It was written for the March-April 2021 edition of Supply Chain Management Review. The full article is available to current subscribers.

March-April 2021

Last night, my wife and I shared a socially distanced bonfire with a few friends. One was a retired physician who is spearheading the vaccination effort in the small New Hampshire city where I live. New Hampshire has had its challenges getting needles into arms like everywhere else, but it seems as if we’re breaking through the log jam. For example, between week 1 and week 3, they’ve tripled the number of people they can vaccinate in a day, and they’ve expanded from five days a week to seven days a week. At least for now, there has not been a shortage of vaccines. I know there is a long way to go, but you can feel it picking up speed. Call me…

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The ocean transportation industry is facing daunting challenges. These are creating headwinds for carriers and shippers alike.

Carriers are challenged by overcapacity, as major players move to bigger and bigger vessels; fierce price competition, often at the expense of customer service; unbalanced route structures; high fuel costs; unreliable schedules and longer wait and transport times for shippers. By some estimates, paper-based operations, the traditional way to manage ocean shipping, reduces capacity by up to 15% and represents up to 20% of the cost of physical transportation, according to the supply chain platform TradeLens.

Faced with uncertain carrier delivery times, shippers are compelled to load their warehouses with just-in-case inventory, incurring higher freight and storage costs. Moreover, a significant percentage of ocean transportation capacity is reserved for large shippers operating with year-long freight contracts. This relegates small- and medium-sized shippers to the spot market, where rates for shipping are more volatile. Sometimes, even large shippers have difficulty planning their delivery cycles in the rapidly evolving global trade environment.

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