Aalborg University finds that the challenges of adopting blockchain in a complex existing system are not unique to port systems.
Sergey Tsiulin – Aalborg University, Denmark
The idea of transforming the maritime shipping industry into a digital platform with real-time communication has become a hot topic in the industry. A key question is the potential role of blockchain technology, which due to its decentralized architecture could potentially simplify some of the complexity of the supply chain network and provide a new way to connect supply chain participants.
Despite this, only a few studies have investigated the feasibility of blockchain-enabled approaches in detail, and without addressing the limitations of blockchain in a systemic way. Aalborg’s work identified and systematised the challenges of blockchain implementation in the maritime industry, and within the maritime port environment. From a review of the relevant literature and building on previous research findings, they identified 18 challenges to blockchain implementation. These were then categorized into four dimensions: human factor, operational, organizational, and technological.
Aalborg’s findings show that different priorities among ports, low levels of digitalization, the scalability of blockchain systems, and unwillingness to change business practices are important challenges to the adoption of blockchain-enabled solutions in this context.
18 barriers to blockchain implementation
Our results found 18 barriers towards blockchain implementation, which we have split into organizational, operational, human factors, and technological categories.
1 Ports prioritize land expansion
2 Customs, landside integration and final customer
3 One-party ownership/development interferes with blockchain decentralization
4 Legal uncertainty
5 Ports have poor level of digitalization
6 If blockchain is about tracking, then the industry is already doing that
7 Unclear costs/benefits
8 Similarity to Port Community System
9 Dependency on manual input
10 Reluctance to change business processes
11 The level of trust is sufficient
12 Scalability of blockchain-based systems
13 Distributed database is confused with limited responsibility
14 Parties are likely to not run their own servers
15 Low maturity of long-term projects
16 Participating mechanism is unclear
17 Distributed systems are often attached to centralized platforms
18 Big part of applications is attached to cryptocurrency
Organizational barriers reflect the port development strategies, where infrastructural development is prioritized over IT solutions. So, maritime ports (at the moment) are looking forward firstly to expand and improve connectivity with different types of transport (rail, road, sea). The complexity of integrating all parties (e.g., customs, cargo senders, port of origin, port of destination, etc.) into one network will be a significant obstacle to blockchain adoption.
Another difficulty is the challenge in embedding and integrating new software solutions into already working IT systems. This challenge is likely to be exacerbated by the unwillingness of some company employees to support changes in their business routines.
There are also a great number of technical challenges. For the port industry, it is not clear how to identify the appropriate blockchain consensus mechanism if the mechanism has to work at different scales (for example, when sharing information between different networks or within different parts of the supply chains).
This process is particularly complicated in the case of projects that imply that they are able to evidence the provenance of goods – i.e. tracking them as they are transported across
a wide supply chain network. Other practical challenges include problems with running and supporting shared servers, educating personnel and managing stakeholders, and so on.
The potential transition to blockchain-enabled solutions is not so much dependent on the development of blockchain technology, as it is of the ability of all of the participating actors to reach a common level of digital capability. Government organizations and frameworks can facilitate a faster transition to digitalization, which could contribute to interest in decentralized systems.
This lesson about the importance of organisational capacity across a partnership to their ability to innovate and to develop is not unique to port systems.
Tsiulin, S., Hilmola, O.P., Reinau, K. H. (2022) The key challenges of blockchain implementation in maritime sector: summary from literature and previous research findings. Proceedings of ISM – International Conference on Industry 4.0 and Smart Manufacturing (in press)