THE USE OF BLOCKCHAIN FOR DIGITIZING IMPORT AND EXPORT PROCEDURES IN VIETNAM

ABSTRACT

The purpose of this article is to explore the possibilities of applying blockchain technology for managing imports and exports, particularly for handing bills of lading in Vietnam. This is done by analyzing the advantages of blockchain technology in various aspects in foreign logistics companies. The novelty of this study lies in its focus on Vietnam, where traditional methods are still used for managing bills of lading. The study offers practical recommendations for businesses seeking to optimize their document management processes in Vietnam.

Keywords: Bill of Lading, B/L, technology, blockchain, logistics and supply chain.

Bill of Lading (B/L) is a document of sea carriage of goods prepared, signed and issued by the carries to the shipper. In this document, the carrier confirms the receipt of a specified quantity of goods intended for shipment by vessel and undertakes to deliver the goods to the rightful recipient at the destination port in proper condition and in the correct quantity, as stated in the receipt. The Bill of Lading is a crucial document concerning transactions between the sender and the carrier, as well as between the sender and the consignee. It serves as proof of cargo operations and as evidence of the transportation contract. Since the Bill of Lading is extremely important, its management and delivery must be ensured and handled in a transparent and strictly controlled manner.

Ascording the regulations, if the consignee want to claim the cargo, they have to present the B/L document to the port. In some situation, the cargo have already arrived at the destination port, but the B/L document is still on the way. This might cause many proplems, for example, delay in delivery to customers, damage to goods due to long storage at port, e.t.c. (see Figure 1).

Figure 1. Old way of transfer of B/L ownership

Digitizing Ocean Bills of Lading to make them more popular and accessible. With the development of important and high-value document, such as the bill of lading, through postal delivery has become outdated. It is comparable to using handwritten letters when you can send emails. Companies have made considerable efforts to digitize ocean bills of lading. However, most ocean bills of lading still rely on traditional delivery methods. One of the reasons for the slow adoption of electronic bills of lading is:

Low security. Centralized data storage technology has many limitations, especially in the field of information security. Hackers can simply attack one location to disable the system, steal, or alter information.

Lack of transparency. The entire import-process involves many parties. However, there is typically only one service company providing electronic bill of lading services. The operations of this company, including its software and databases, are not made public.

Blockchain technology can solve this problem and help make the digitization of ocean bills of lading more popular and accessible. Currently, 95% of ocean bills of lading worldwide still use paper-based delivery methods. According to World Bank statistics, in 2016, the number of containers shipped globally of 50 million containers. Therefore, if successfully implemented, new blockchain technology could help the world save hundreds of billions of dollars annually. Since the bill of lading is very important and high value, the original bill of lading is usually delivered safely and securely from the place of shipment to the place of receipt. This process has the following limitations:

High cost. Depending on the delivery distance, the processing and delivery cost ranges from $200 to $450 per bill of lading.

Long delivery time. The average delivery time for a bill of lading is 5 to 10 days. Sometimes the shipment of goods (from port to port) is faster than the transfer of the bill of lading (from the place of dispatch, by air to the destination country, and then again by courier to the final destination). In addition, the bill of lading passes back and forth through many places, specifically: the house bill of lading is transferred from the shipping line to the freight forwarder, the master bill of lading is passed from the forwarder to the shipper, then the shipper transfers it to the bank. The bank sends it to the bank on the receiving side, and finally, it reaches the port and customs to enable cargo release procedures.

Since the bill of lading undergoes many stages of transportation and handling, it is at high risk of being lost, stolen, or altered. The process of reissuing or certifying a bill of lading is very time-consuming and expensive. In particular, the it takes to report a lost  bill of lading and issue a new one can take several weeks. This can lead to cargo delays at the port, which may result in damage to the goods. The costs for demurrage, delay compensation, or damage can amount to many millions of dollars.

Figure 2. New way of transfer of B/L ownership

The Obvious Advantages of Blockchain Technology When Applied to Bills of Lading. The application of blockchain technology to bills of lading offers a number of clear advantages. First and foremost, a high level of security is ensured because the bill of lading data is stored in multiple copies on different computers, which are connected through a peer-to-peer sharing network. This makes it difficult for hackers to attack and edit the information, as they would need to compromise many computers in various locations. In addition, the data is encrypted and accessible only to authorized users.

Another important aspect is the transparency of the system. Each company and organization involved in the process can store data independently, giving them greater confidence in the security of their critical information. The system operates openly, allowing its functioning to be verified.

The next advantage is the low cost, as delivery expenses become virtually zero. Transfer times are also reduced to an instant, comparable to sending an email. Furthermore, a bill of lading stored on the blockchain cannot be lost or edited.

The use of blockchain technology for bills of lading also simplifies verification and tracking. The information is stored permanently and cannot be altered, reducing the likelihood of errors. The use of electronic bills of lading helps reduce paper consumption, minimizes the need for personnel, and decreases the chance of errors in the process. These factors collectively make blockchain technology an attractive and effective solution for improving the bill of lading system.

The Implementation of This Solution Will Bring Significant Benefits to Various Organizations. Thanks to the substantial reduction of costs and the minimization of errors and risks, shipping companies, including shipping lines and maritime freight forwarders, will be able to optimize their operations by improving transparency and data security in the bill of lading system. This will not only save money but also reduce the likelihood of errors and risks associated with the loss or alteration of documents.

Import-export companies will also benefit from this solution, as it will enable more efficient management of their cargo shipments, reducing both transportation time and costs.

Among clients who frequently use maritime transport—such as retailers and manufacturing companies—this solution will create a more efficient and reliable system for tracking and managing cargo, ultimately improving overall efficiency and reducing expenses.

In addition to those mentioned above, this solution will also involve various departments, such as port authorities, customs, and banks. Port management will be able to optimize cargo handling processes, customs authorities will receive more accurate and reliable data for customs procedures, and banks will facilitate financial transactions, as all information will be stored in a secure and transparent blockchain system. Thus, this solution offers comprehensive benefits for a wide range of organizations and their departments, promoting more efficient and secure cargo management.

Practical Application. Due to the enormous and clearly visible advantages of blockchain technology applied to bills of lading (B/L), a number of large companies worldwide have started testing and have achieved positive results.

Pacific International Lines (PIL), a company from Singapore owning 150 container ships of all types and employing 18,000 people worldwide, developed and tested an electronic bill of lading using blockchain technology. The company tested a shipment of 3,000 boxes of oranges (about 108,000 oranges) imported from China to Singapore through the import company Hupco. [1]

The Results:

• Minimized administrative procedures and reduced the entire B/L process time from 7 days to 1 second.
• The importing company, Hupco, benefited from being able to receive goods faster than usual. This is very important for fresh products that require speedy delivery.
• All documents can be tracked in real time, ensuring their secure and unalterable storage, which helps reduce the risk of fraud by up to 40%.

The results of the above-mentioned experiment represent an important milestone confirming the effectiveness of this application in real-world conditions, including in Vietnam.

There are many large companies in the world that have tested and gradually implemented blockchain for bills of lading, such as:

Manuchar – a logistics and trading company from Belgium, operating in more than 50 countries.

Zim Integrated Shipping Services, the largest shipping company in Israel, ranked among the world’s top 20 shipping companies. [2]

G2 Ocean (Gearbulk and Grieg Star) in Northern Europe, with over 130 vessels. [3]

Maersk, a Danish logistics company, operates in 130 countries with a staff of 88,000 employees. [4]

Governments are also starting to embrace blockchain technology, clearly seeing its effectiveness. Many have programs to promote and support companies in adopting this technology. In January 2018, a Memorandum of Understanding was signed between MPA Singapore Ports, the Singapore Shipping Association (SSA), and Singapore Customs to collaborate on developing an electronic bill of lading application, specifically using blockchain technology. [5]

From a legal perspective, the United Nations Commission on International Trade Law (UNCITRAL) has published a model law applicable to the transfer of ownership rights for electronic documents, including electronic bills of lading. Some countries have begun adopting formal laws. For example, in the United States, New York State law permits commercial contracts and electronic transactions, including electronic bills of lading and digital documents, as outlined in the Uniform Commercial Code (UCC). In countries where legal adoption is slower, companies often collaborate and sign contractual agreements that allow for the transfer of ownership rights on documents and electronic contracts, including electronic bills of lading, between members and organizations. [6]

Major shipping companies, such as FedEx, are urging governments to conduct research and adopt appropriate laws for the application of blockchain in logistics as soon as possible. FedEx believes that blockchain is the fastest way to modernize and simplify logistics, helping meet the growing demand for cross-border freight transportation. In addition, the use of blockchain will help customs authorities work more efficiently to reduce the volume of illegal goods. [7]

 In conclusion, the application of blockchain technology for managing bills of lading is truly necessary. Judging by the results of applying blockchain to bills of lading at large enterprises in neighboring countries, if Vietnam can also implement the above-mentioned technology, then logistics and supply chain management in Vietnam will experience a breakthrough.

References:

1. PIL and IBM collaborate on blockchain Bill of Lading project // URL: https://container-mag.com/2019/02/01/pil-ibm-collaborate-blockchain-bill-lading-project/ (дата обращения: 3.3.2025).
2. ZIM Moves Forward with Blockchain-Based Bill-of-Lading // URL: https://www.offshore-energy.biz/zim-moves-forward-with-blockchain-based-bill-of-lading/ (дата обращения: 3.3.2025).
3. Blockchain based bills of lading making rapid progress // URL: https://www.shippingandfreightresource.com/blockchain-set-to-push-paper-bill-of-lading-into-retirement (дата обращения: 3.3.2025).
4. IBM-Maersk blockchain shipping consortium expands to include other major shipping companies // URL: https://techcrunch.com/2019/05/28/ibm-maersk-blockchain-shipping-consortium-expands-to-include-other-major-shipping-companies/?guccounter=1 (дата обращения: 3.3.2025).
5. Singapore explores blockchain for electronic bills of lading // URL: https://www.ledgerinsights.com/singapore-blockchain-electronic-bill-of-lading/ (дата обращения: 3.3.2025).
6. The legal status of electronics bill of landing // URL: https://www.icc-austria.org/fxdata/iccws/prod/media/legal_committee/The-Legal-Status-of-E-bills-of-Lading-Oct-2018.pdf (дата обращения: 3.3.2025).
7. FedEx Calls To Mandate Blockchain For International Shipping // URL: https://bitcoinist.com/fedex-calls-to-mandate-blockchain-for-international-shipping/ (дата обращения: 3.3.2025)