Abstract
The paper analyzes the potential impact of blockchain technology and smart contracts on the shipping industry. As the shipping industry represents a complex system of various actions that have to be controlled and registered, blockchain technology could serve as a tool to allow the streamlining of numerous processes, whilst at the same time taking the human factor out of multiple elements where trust between involved parties is an issue. The authors therefore first present how blockchain technology works and what smart contracts are, in order to give an insight into their applicability in the shipping sector. After a general overview of the technological and legal characteristics of blockchain technology and smart contracts, the authors present examples of relevant subjects, relations, and contracts in the shipping industry. Based on the charter party, a key contract in the shipping industry, the authors present the existing problems which could potentially be solved using blockchain technology. Besides the benefits of blockchain technologies, the authors furthermore point out the existing deficiencies that still make blockchain technology hard to apply in legal relations within the shipping industry. Based on these insights, the authors highlight the current developments in this area and present the existing and expected regulatory reforms of blockchain solutions and smart contracts within the European Union.
Highlights
When someone mentions blockchain or smart contracts, most people will immediately think of virtual currencies like bitcoin, Litecoin, or ether
As key benefits of smart contracts it is for example pointed out that they: (1) reduce risks as they are saved on an inalterable blockchain, (2) cut down administration and service costs as automation substitutes the need for a mediator or a central broker, and (3) improve the efficiency of business processes by cutting out intermediaries from the process[22] there are many benefits of smart contracts, later in this paper we show how they are used in the shipping industry, and we analyze the problems that emerge in their application in practice
The International Maritime Organization (IMO) is a specialized agency of the United Nations and it is in charge of the safety, security, and environmental performance of international shipping, which transports more than 80 per cent of global trade.[43]
Summary
When someone mentions blockchain or smart contracts, most people will immediately think of virtual currencies like bitcoin, Litecoin, or ether. 2020; 02: 365-373 value to the global market,[3] the shipping industry is being placed in the very center of the adaptation of blockchain and smart contracts into their way of functioning.[4] Numerous companies, countries, and academic institutions are working to implement blockchain technology. (2020): Blockchain: How shipping industry is dealing with the ultimate technological leap, Research in Transportation Business & Management 34, 100428, available at: www.elsevier.com/locate/rtbm, accessed: 8. As an example of current situation we can point out that “inter-firm information sharing systems are outdated and manual processes still prevail in the majority of its supply chain This results in a lack of coordination among industry actors, poses security risks and an increased workload for authorities, reduces trust between parties doing business in the industry, and reduces the overall efficiency of business processes”. Proceedings of the 5th ACM international conference on Collaboration across boundaries: culture, distance & technology - CABS '14
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