Singapore: Riding the Rising Tidal Wave with Blockchain

Asia Blockchain Review
October 29, 2019

Singapore Leads the Way as SEA’s Top Maritime Hub

In the Leading Maritime Capitals of the World Report 2019, Singapore was once again ranked as the world’s leading maritime hub after having been ranked as such in the previous version of the report in 2017. In the context of Southeast Asia (SEA), Singapore, due to its strategic geographical position, is the largest shipping port in the region. Nonetheless, the undertaking by China of its geoeconomic agenda through the Belt and Road Initiative (BRI) is increasingly posing a threat to Singapore’s position as SEA’s leading maritime hub. 

In particular, China is aiming to use the BRI to develop alternative maritime trade ports, with options including Indonesia’s Tanjung Priok Port, Malaysia’s Port Klang, Pakistan’s Gwadar Port, Sri Lanka’s Hambantota Port, and Australia’s Darwin Port. With the threat of China’s BRI looming large, blockchain may prove to be useful for Singapore in its endeavor to cement its position as SEA’s and Asia-Pacific’s leading maritime hub.

Blockchain for the Shipping Industry

Although 90% of global trade volume is shipped by sea, the practices of the shipping industry is surprisingly archaic in an increasingly digitized economy. For example, a survey found that 50% of market players in the shipping industry are still using physical spreadsheets to keep track of shipments. Additionally, paper-based bill of ladings are still commonly used by shipping companies in most parts of the world. These outdated practices result in delayed shipments, cost inefficiencies, and undue expenditures. 

Blockchain, with its use of automated, transparent and immutable ledger records, would come in handy for the shipping industry in relation to its cargo management operations and logistics tracking activities. In this regard, it is notable that Maritime Transport International estimates that the use of blockchain may result in cost-savings of up to US$5.4 million per container for the shipping industry. Given all these advantages that blockchain offers to the shipping industry, it is unsurprising that Singapore has already begun leveraging the technology to secure its position as the leading maritime hub in SEA.

Blockchain Use in Singapore’s Shipping Industry

Given the importance of bills of lading in establishing ownership of a shipment, using electronic bills of lading (EB-Ls) would pose a significant upgrade for the industry to reduce the risks of loss and fraud, not to mention the handling costs associated with paper-based documentation. In this regard, the Singaporean government is leading the SEA shipping industry by example with the launch of its maritime trade platform TradeTrust in March last year

The Singaporean government aims to use the TradeTrust platform to streamline the documentation process for the local shopping industry through the use of blockchain-based (EB-Ls). Following the government’s lead, Pacific International Lines (PIL), the biggest market player in Singapore’s shipping industry, had in October last year entered into a collaboration with global technology giant IBM to develop EB-Ls

Other than EB-Ls, the use of blockchain by Singapore’s shipping industry also covers another important document in the maritime world: the Certificate of Origin (CO). In May last year, the Singapore International Chamber of Commerce (SICC) became the world’s first chamber to use blockchain for the issuance of electronic Certificate of Origins (eCO) which was developed in collaboration with local company vCargoCloud. SICC’s eCO leverages blockchain’s tamper-proof immutable ledgers to validate the authenticity of information about the origins of goods, in line with the self-certification regime of the ASEAN Single Window (ASW) framework.   

Another area in the shipping industry in which blockchain may be applied is maritime safety. In 2018, there were a total of 201 pirate attacks against ships from around the world. Although this is considerably less than the 10-year high of 445 pirate attacks recorded in 2010, it still presents considerable risks to the global maritime industry, particularly to crewmembers and the shipments themselves. In this regard, Zeaborn Ship Management (Singapore) had in January this year entered into a collaboration with local startup Blocbox to work on a project to use blockchain to encrypt data in the black boxes of ships. Ships that have been fitted with blockchain-secured black boxes can be tracked using encrypted location information stored in the black boxes

More recently, in October this year, the Singapore Shipping Association (SCA) announced that it is working with the International Chamber of Commerce (ICC) and local blockchain startup Perlin to use blockchain for the registration and licensing of ships in the country. With the support of the Maritime and Port Authority of Singapore (MPA), SCA and ICC will jointly develop the blockchain-based International E-Registry of Ships (IERS) to improve the ship registration and license renewal process for over 4,700 vessels in the country.

Blockchain to Help Singapore Navigate the Rising Tide

With the Sino-US trade war threatening to wreak havoc on the global economy and the BRI projected to divert large volumes from Singapore’s ports, the tide appears to be rising on the Lion City. However, blockchain may be the technological surfboard that can help Singapore’s shipping industry ride through the choppy waters heading towards its shores.

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