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Shipping Sector

Diagrams

Supply chain

Traditionally, supply chains suffer due to paper-based systems where forms pass through multiple channels to get approvals. The laborious process increases the risk of fraud and loss.

Blockchain can nullify such risks by delivering an accessible and secure digital version to parties involved in the chain. Smart contracts can be used for inventory management and the automation of payments and tasks.

  • Tracking products from producer to consumer
  • Provenance traceability, add code to the blockchain

Problems

In global trade goods pass between a network of ocean ports, airports, warehouses, and other nodes to reach their final destination. Without a logistics standard to act as a request-response protocol, all the players — suppliers, drayage, ports, warehouses, buyers — have to stitch their networks together manually.

Types of errors that slow the exchange of goods:

  • Information gets lost
  • layers of redundancy
  • low transparency

For a typical shipment due to arrive in port, there is no standard for:

  • terminal exactly and what pier number?
  • the time of pickup?
  • How long before late charges are incurred?

Finding answers is labor-intensive and imprecise. Logistics managers end up consulting different sources on websites, via email, or in person.

The dirty secret of the industry is that no one really knows where their stuff is.

Reality

Containers travel on ships and planes, clear customs in the destination country, and get distributed to warehouses via regional rail and truck networks.

Complexity

There are thousands of ports, harbors, and wharfs.

Over a thousand transoceanic mega-vessels.

Fragmented

In a highly fragmented industry, thousands of independent freight forwarders make up a $2 trillion business.

The number one freight forwarder in the world has less than 3% market share.

The remainder is comprised of thousands of mostly regional distributors. Their strength lies in their knowledge their local trade environment where this data is not visible to global operators.

Progress

It is impossible to upgrade the physical infrastructure that drives the movement of containers.

If it takes two years to make the Suez Canal 131 feet wider, imagine how long it would take to upgrade the entire world's logistics infrastructure.

The Dream

If global trade had a standard protocol for communication like the internet, it would be possible to understand the reality of current situation and make better more efficient routing decisions.

  • Need for standardization
  • Need for a universal language for global trade

The Ever Given spectacle revealed the hard limits of the current system and the chaos hidden underneath all our global trade systems. Standardization could address this chaos.

Strengthen the World

Strengthen infrastructure and therefore strengthen trade and innovation that strengthens the world. (League of nations)

In some instances, it can take up to 20 companies to move a single shipment — each with their own systems, processes, and documentation.

Information is accessibility, democratizing the playing field and reducing barriers to entry, not to mention reducing barriers to trade.

According to economists:

  • 1% increase in trade overall, is associated with a 0.149% decline in poverty
  • 1% decline in the average tariff rate is associated with a 0.4% decline in poverty

COVID Impact

Trade ground to a halt, the world experienced demand shock, spending plummeted; and then, demand for essentials spiked, marked by hysteria for essential products.

Demand for ocean shipping smashed records across the board. Creating global traffic jam. Before the pandemic, transit times from mainland China to the West Coast took around 33 days.

Now, it’s more like 60.

There are shortages of (most acute in Asia)

  • Vessel berths
  • Cranes
  • Truck chassis
  • Truck drivers
  • Containers

Ship Size and Orders

More than 400 container ships, totaling 3.63 million TEUs, have been ordered new since late 2020. (Bigger ships reduce emissions per container.)

TODO: Get data on size and numbers of container ships

Can only get so big and maintain seaworthiness.

Containers Overboard

During the two-month period between November 2020 and January 2021, almost double the annual average number of containers went overboard. Some of this was due to the winter season, which is when westerly winds across the Pacific Ocean blow strongest.

Glossary

Drayage

Drayage is a term utilized by the shipping and logistics sector, typically to describe the process of transporting goods over short distances. While drayage can be used for minor transporting of goods, usually it is confined to use by the container shipping industry

GDP is traditionally the measure of productivity

ConceptsNotes
Shipping
Containers
Docker
Kubernetes
Mono Repos

Learn more

URLNotes
Supply chains and the physical world