Issue link: https://maltatoday.uberflip.com/i/1080741
S3 maltatoday | SUNDAY • 10 FEBRUARY 2019 SHIPPING & LOGISTICS "THE best blockchain networks are often the hardest to create." That seems to be the overarch- ing theme in the latest report from Boston Consulting Group (BCG) in relation to blockchain technology. BCG refers to the transpor- tation and logistics (T&L) in- dustry, in particular, where mistrust is proving a hurdle in bringing its diverse participants into a "common blockchain ecosystem", despite around 88 percent believing that block- chain will disrupt the industry to varying degrees according to the group's research. This lack of trust being a hindrance to the technology's adoption is where a paradox lies, with integrity often touted as a cornerstone of blockchain's immutable and transparent na- ture. Nearly two-thirds, meanwhile, expect that disruption to take place within the next two years. Perceived benefits include re- ducing sources of friction across countless suppliers, dozens of handoffs, and ever-changing regulations. Blockchain's po- tential application could see im- provements to speed, traceabil- ity, cargo safety, and invoicing and payment processes, leading to substantial cost reductions and helping to relieve the in- tense margin pressure experi- enced by many industry players. But despite the apparently positive view of distributed ledger technology to solve T&L pain points, efforts to utilise it can be hampered by a limited understanding of the tech and lack of in-house expertise – as well as an overall absence of co- ordination. More so than any other indus- try, the nature of T&L opera- tions across multiple countries and jurisdictions, with varying and often complex regulatory requirements, saw more than 35 percent of executives citing regulatory compliance issues as a significant barrier to block- chain adoption. Limited trust is a core issue, though, with many stakehold- ers reluctant to abandon their long-standing relationships and give up their information ad- vantages in favour of blockchain solutions. "Considering the magnitude of the potential benefits, block- chain adoption by the T&L industry has been slower than one might expect. Adoption has been impeded by the very same obstacles relating to coordina- tion and trust that the technol- ogy would help the industry to overcome," read the report. "That, in essence, is the indus- try's blockchain paradox. To re- solve it, stakeholders must un- derstand how the following two industry characteristics are in- hibiting blockchain adoption." In order to solve these chal- lenges and realise the benefits of blockchain technology to their business – or to solve the "block- chain paradox", as the report refers to it – BCG recommends T&L stakeholders develop an "industry-wide ecosystem". That would see the establish- ment of standards and govern- ance – including policies, tech- nical elements, governance and decision rights and commercial considerations too. Companies also need to com- mit to learning about the tech- nology, identify the oppor- tunities, test the feasibility of potential applications and, most importantly, scale up commer- cialisation in stages. Transportation, warehousing and the 'blockchain paradox' Blockchain's potential application could see improvements to speed, traceability, cargo safety, and invoicing and payment processes, leading to substantial cost reductions and helping to relieve the intense margin pressure experienced by many industry players