Shipping and the environment possess a unique symbiotic relationship. While supply chains underpin global trade and deliver a myriad of socioeconomic benefits, there are also very tangible implications on the environment. In turn, the environment affects the operating conditions of such supply chains with implications for infrastructure requirements, maintenance and so forth. When weighing up the cost and benefits, a socio-ecological equilibrium must be struck.
Rightfully sustainability has become the topic du jour in the boardroom, as well as for policy makers. Aligned to this, safe transportation plays an important role in minimising shipping’s environmental impact. Unfortunately, it is inevitable that accidents will happen and on occasions with potentially serious consequences for both life and the environment. Earlier this year, a crew member was killed after seawater entered the hull of The Benchamas 2 following a seal malfunction that also led to oil from the vessel spilling off the shores of Thailand.
All too often safe transportation is a discussion which only resurfaces in the wake of an incident. Thankfully, safe transportation has come in leaps and bounds following an increase in awareness of the environmental and financial costs of oil leakage accidents. Strong gains in safety over the past decade have been largely credited to the global regime of safety and environment rules promulgated by the International Maritime Organization (IMO).
However, while the industry acknowledges the importance of safe transportation to the environment and the need to meet stricter regulations, monitoring and enforcement remains hard. Due to the complex nature of global supply chain and its many stakeholders, this has become a largely manual process with lots of inaccurate information and little transparency.
The hidden cost of risk, mitigation and recovery
Accidents, although relatively rare, can result in not only business disruption and heavy financial losses to all impacted, but also devastating environmental damage and subsequent civil and labour actions.
In reality, the total costs incurred by supply chain activities, notably environmental damage, are not fully assumed by service providers and customers. This is due to the inherent distrust resulting from the fact that many often-competing stakeholders are forced to collaborate with each other. There is little incentive to share data resulting in many data siloes and incomplete or untimely data being shared. The challenge is further compounded by the fact that there is a large array of costs ranging from operations and compliance, to quantifying the risk of an event such as a chemical spill or explosion. This poses governance challenges and in the event of an environmental incident this can also potentially impede damage mitigation and recovery efforts.
Enabling more complete and accurate data sharing and visibility of dangerous cargo transportation such as chemical goods will make it easier for supply chain service providers to manage, monitor and enforce transportation safety measures and compliancy to prevent or contain and minimise damage and expedite recovery from an unfortunate catastrophe or incident.
Breaking data siloes and enabling trusted collaboration
At the same time, the shipping industry is undergoing a digital leap of which new technologies are being embraced such as blockchain that offer immutability and verifiability. These technologies collectively offer a practical solution that addresses some of the mentioned challenges by enabling secure data exchange and trusted collaboration between different parties.
Recently COSCO Shipping Lines, Orient Overseas Container Line (OOCL) and the Shanghai Research Institute of Chemical Industry Testing (SICIT) leveraged the Global Shipping Business Network (GSBN)’s blockchain infrastructure to create an industry first proof-of-concept to enhance transportation safety. GSBN is an independent technology consortium whose aim it is to develop and operate digital infrastructure to enable innovation and trusted collaboration for the industry.
As industry best practice, special cargo with designated goods, such as chemicals and lithium batteries, should be certified as safe to transport before they are handed over to logistics and shipping companies for export. This is important because carriers will manage the transportation based on the corresponding certification to mitigate the risk of potential accidents and protect crews, downstream stakeholders and subcontractors.
Consider lithium battery units which are generally safe. However, they may release gas, cause fire or explode if they are damaged during the transportation process with potentially serious consequences, causing danger to life and irreversible environmental damage due to its toxic composite materials.
Considering the rapid demand for lithium batteries, ensuring its safe transportation is of growing concern. Global growth in electric cars and electronics has led to a 65% year-on-year increase in lithium-ion battery production in 2022. With this market expected to grow over 30% annually over the next decade, it is impossible to ignore the risks of its transportation and potential environmental accidents.
It is therefore necessary for certain special cargoes with designated goods, such lithium batteries and other chemicals, to be certified as safe for transportation before they are handed over to logistics and shipping companies for carriage.
For exports from China, SICIT is one of the main organisations authorised to test and issue safe transportation certificates. Traditionally, shippers would collect the certificate from an accreditation body and provide the document either as a hard copy or as a scanned copy to the carriers. However, for the carriers and subsequent transportation companies in the supply chain, certificates shared in this form can be hard to verify, thus carrying risks such as mislabelling and fraud.
By harnessing GSBN’s blockchain-enabled platform, a new streamlined process has been designed to ensure that safe transportation certificates and the information they contain can be verified from the original source, and the information is accurate and reliable.
Enhancing supply chain collaboration for safety and quality governance
From an ESG perspective the benefits are clear. From the above it is clear that not only safe transportation contributes towards the environment, but accurate and complete data also benefits socially from a safety perspective as well as enable better governance. Furthermore, aside from the accountability it enables, the biggest benefit of the COSCO, OOCL and SICIT collaboration, is service quality through ability to provide enhanced assurance and confidence to their customers.
Economies, societies and livelihoods depend on functional and safe supply chains. New technologies are helping enhance the safety of supply chains by solving some of the unique challenges faced by the industry when it comes to collaboration. Better information flow, trust and transparency can make great strides in further preserving life, property and the environment.
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