Consortium to Test Blockchain in Bunker Industry
- Business & Finance
Industry majors Lloyd’s Register, Precious Shipping, Bostomar, BIMCO, International Bunker Industry Association (IBIA), and GoodFuels have established a consortium to address traceability and transparency in the marine fuel supply chain by using blockchain technology.
The consortium was set up via Maritime Blockchain Labs (MBL), a subsidiary of blockchain technology and governance specialists Blockchain Labs for Open Collaboration (BLOC).
MBL believes the bunker industry, with its multiple, complex transactions is an ideal use case where blockchain technology can help increase transparency and boost compliance and stronger governance.
The consortium plans to evaluate how blockchain technologies could help to provide an efficient, tamper-resistant and auditable chain of custody on quality and quantity recording activities, together with a reputation system of the compliance of fuels prior to purchase, benefitting both buyers and regulatory bodies.
The ultimate goal is to reduce safety risks and create a more trustworthy framework for accurately monitoring emissions from shipping such as sulphur and carbon.
The project represents the initial stage of the Lloyd’s Register Foundation-funded MBL initiative, an industry collaboration for the creation of blockchain technology in the maritime space.
“MBL takes an industry-led approach – meaning that the solutions will be identified, designed, and tested by the industry itself, with MBL facilitating governance and developing the technology to ensure these solutions are relevant and used. A consortium approach is essential due to the need to cross regulatory boundaries and work within different organisational bodies and systems,” Deanna MacDonald, CEO and co-founder of BLOC, said.
Each member of the consortium represents a different actor in the marine fuels value chain. Lloyd’s Register FOBAS will share knowledge and information about the fuel supply and quality testing process as well as provide bunker quality test data for the building and piloting phase.
BIMCO and IBIA will serve as advisors on contractual aspects of the project and demonstration of the fuels quality traceability/accountability, Precious Shipping and Bostomar Shipping, being owners and operators of ships, will be in charge of demonstrating the fuels quality traceability and accountability as buyers.
GoodFuels will provide insight into the project from the perspective of a supplier of commercial and sustainable marine biofuels for the shipping industry.
“As an off-taker of marine fuels, it’s vital for us to ensure that the fuel we use is compliant – particularly when we think about the market post-2020, and the need to ensure the quality of blended products coming in to meet the 0.5% Sulphur limit. Blockchain is ideally placed to create the reliable chain of custody we need to do this,” Khalid Hashim, Managing Director at Precious Shipping commented.
“As leaders in the development of standard contracts and clauses used in shipping, we feel we have an essential role to play in investigating the use of new technologies that may help evolve the way contracts are used. Bunker purchase contracts are one part of a complex chain of activities in the bunker industry. Blockchain “Smart Contracts” based on harmonised terms and conditions like the BIMCO Bunker Terms 2018 could be a stepping stone for the industry to achieve greater transparency and efficiency,” Grant Hunter, Head of Contracts & Clauses at BIMCO added.