Blockchain Technology in Maritime Transportation and Management

Blockchain Technology in Maritime Transportation and Management

Murat Selçuk Solmaz (Piri Reis University, Turkey) and Murat Koray (Piri Reis University, Turkey)
DOI: 10.4018/978-1-7998-1397-2.ch026
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This chapter discusses using blockchain technology in maritime transportation and management. Blockchain technology is less than 10 years old. With a lot of its features, the new technology has the potential to solve many problems in many sectors. Nowadays, this potential attracts many companies and organizations to try the blockchain technology in their sector to find the solution to their problems, to increase their profit, and to decrease the time spent for doing their jobs. Like other sectors, there are many works in maritime transportation and management for using blockchain technology. This chapter introduces blockchain technology and examines current and future uses and applications of it in maritime transportation and management.
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The transportation of goods from one place to another within the world trade constitutes an important link of the logistics system. In addition, transportation constitutes the largest activity of the logistics system, which accounts for one third of the logistic costs. As it is known, two thirds of the world is covered by oceans and seas. The fact that seas and oceans constitute a physical obstacle necessitates transportation by either maritime or airway. Compared to the maritime transportation by air transportation, it is seen that transportation costs are very low in maritime transportation and the amount of cargo carried by a ship at one time is hundreds of times higher. Therefore, maritime transportation is unrivaled as the best method of transportation.

According to 2018 figures (Worldbank, 2019a), the gross domestic product of the world is approximately US $ 85,791 trillion. Considering the monetary value of the products exported in world trade, it is seen that the figure is US $ 19.6 trillion (Worldbank, 2019b). It is known that seventy five percent of this trade is carried out by sea. The continuation of commercial transactions in maritime transportation, which have such a size, requires the operation of many mechanisms. Due to the international nature of maritime transportation, although transportation is based on certain standards in the historical process, differences in language, system and law between countries cause the use of many intermediaries and many commercial documents. This causes loss of time and money. In some cases, the transportation may cause the cargo to arrive late due to bureaucracy problems. In order to solve the problems created by this complex system in maritime transportation, it is inevitable to use a system other than classical methods. Thanks to envisaged system, it is considered that costs can be reduced while increasing the amount of goods transported, that is, making maritime transportation much more effective. Considering the studies conducted in recent years, it is appreciated that blockchain technology can bring practical solutions to many problems of maritime transportation.

It has been almost ten years since blockchain technology was first introduced by Satoshin Nakamoto with his article “Bitcoin: A Peer-to-Peer Electronic Cash System” (Nakamoto, 2008). During this time, blockchain technology has started to attract the attention of the whole world. Because the system was first introduced to the world by electronic money system concept, blockchain technology was mostly semantically mixed with virtual money. For this reason, blockchain technology is thought to be just an electronic money system. Today, it is understood that the system is a reliable recording system rather than electronic money. Previously, it was seen that the institutions approaching this system with suspicion started to find ways to understand this system more closely and benefit from it.

Blockchain technology consists of computers connected to each other in a decentralized structure. Data is recorded by encrypting all computers in the chain. In this way, it is not possible to change the data illegally and the data is stored in a safe manner. Due to the accuracy of the data, there is no need for intermediaries which are known as Trusted Third Parties in international trade. The elimination of these intermediaries reduces costs. In addition, in blockchain technology, all kinds of records are open to everyone, so transparency is in the foreground. Thanks to these features, blockchain technology has been used in maritime sector as in many other sectors. In this chapter, the current applications of blockchain technology in maritime transportation and management in the world have been determined by the literature review method and it has been evaluated that blockchain technology can find solutions to problems in this sector in the future. The study is important in terms of compiling blockchain technology's usage areas in maritime transportation and management and offering solutions to current problems.

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