Blockchains and Intermodal Transportation

Blockchains and Intermodal Transportation

A simple intermodal chain can involve an exporter, an importer, as well as the different carriers and terminals acting as intermediaries. Assuming one full dry container load (reefers or hazardous materials trade would generate more transactions and information), for an intermodal transportation chain to occur, a series of operations and related information flows are required. Although blockchain technology has little to do with the operations, it substantially changes how the related information flows are stored and shared among the involved parties.

For instance, the preparation of an order may require tasks such as packaging and stuffing the consignment into a container. This order generates information flows such as a certificate of origin, a commercial invoice, a packing list, an insurance certificate as well as the booking of a carrier (or a third party logistics provider) to move the container consignment to a specified destination. This information can be stored in a blockchain and made available to the carriers and other concerned actors along the intermodal transport chain to use for their own purpose. One particular use is the construction of blockchain bills of lading.

The truck carrier uses the blockchain information to issue its bill of lading, which is appended to the blockchain and comes into force once the container has been picked up. This blockchain is populated with additional blocks as the carrier performs its transportation service, such as the equipment used (truck and chassis), the date the container was picked up, the container identification number as well as any notable events during transportation. An event can be passing at a specific location (e.g. a toll), the duration of a stop (for rest), or a change of driver and/or truck. Through the use of sensors, it is possible to automatically input event information in the blockchain, such as location at a given time.

At the container port terminal, various operations will continue to populate the blockchain. The time the container crossed the terminal gate (transfer of liability), its yard storage location, as well as the customs export clearance, are among the most important. A series of events can also be inputted into the blockchain, such as the equipment used to handle the container or if it was re-stacked (for yard management purposes). Once the container has been brought quayside and loaded into a containership, a smart contract can automatically be executed if the Incoterms involved Free On Board (FOB), which would pay the supplier since the terms of the contract have been met (under this contract, the supplier would also pay the truck carrier and the terminal operator). There is also the possibility of using cryptocurrencies to settle blockchain smart contracts and acting as booking deposits in case of no-shows from the shipper or over-booking from the carrier.

The shipping line issues a master bill of lading, which is its obligation to carry containers from the stated port of origin to the destination port. A series of events can also be recorded, such as daily location or the use of a transshipment hub involving terminal operations and a change of ship (and even of shipping line). A few days before the arrival, the shipping line can issue an arrival notice (with ETA) on the blockchain to the consignee to arrange land transportation.

At the port of destination, similar intermodal operations are performed and appended to the blockchain. If the Incoterms are Cost Insurance Freight (CIF), then a smart contract can automatically pay the supplier (including the shipping line, the terminal operator, and the truck carrier). Once the container received customs clearance (compliance met and duties paid and appended on the blockchain), it is ready to be picked up by the land carrier. In this case, we assume a rail link performed from an on-dock rail facility with its own bill of lading to be appended to the blockchain. The sequence is then repeated for the last mile truck haulage with all the appended information to the blockchain.

At the destination, the final operations are performed on the container, such a destuffing and stocking the items in the distribution center. Upon inspection, if the shipment matches the order, then the commercial invoice can be cleared, the blockchain updated and the supplier paid if the Incoterms were Carriage and Insurance Paid (CIP). This marks the end of this blockchain, which now contains the complete transport, intermodal, and transactional sequence of this intermodal chain.