Blockchain was first known to the public as a technology that underlies secure transactions of cryptocurrencies. Then with the unprecedented Bitcoin boom in 2017, blockchain started to draw much attention from not just individuals but from businesses and governments. Many attempts have been made to see if it’s actually feasible to adopt blockchain in administrative tasks or business activities.
The blockchain boom is also found in the Gartner Hype Cycle. Although blockchain technology drew a huge amount of attention back then, there wasn’t a clear business model, as with other technologies on the Peak of Inflated Expectations of the Gartner Hype Cycle.
During that time, Samsung SDS carried out a research on what impact blockchain would have on logistics and formed the Blockchain Container Shipping Consortium with 38 businesses and institutions including customs authority, shippers, container shipping companies, port authority, banks, etc. Together, they ran a proof of concept (PoC) of Samsung SDS’ blockchain platform on export shipping processes and found its benefits in terms of integrated visibility, process improvement and greater transparency into transactions.
In 2018, Samsung SDS partnered with Korea Customs Service to develop a blockchain platform for export customs logistics services. And together, we found blockchain-based process automation can help reduce costs as described in Figure 2.
At the same time, Samsung SDS started supply chain traceability services by leveraging immutability of blockchain technology as blockchain-enabled traceability can be applied in different areas and in different ways.
Among many different areas blockchain-based traceability can be applied, Samsung SDS decided to work on seafood traceability first for reasons below:
-Seafood is the main source of protein for Koreans. Korea is among the top fish consumer country.
-Illegal fishing causes seafood extinction.
-Concerns are rising over food safety and environmental pollution.
-Consumers are calling for a sustainable seafood market.
This white paper explains the current issues facing the seafood industry, the features of blockchain traceability services and how the traceability platform developed by Samsung SDS can help solve the issues.
2. A Changing Global Seafood Industry
Overview & Key Issues
In its 2018 report titled A Journey towards Sustainable Seafood, the World Wildlife Fund (WWF) mentioned that approximately three billion people in the world or more than half of the world’s population rely on seafood as their primary source of protein. In Korea, 40 percent of its protein intake is from seafood.
According to Fishery and Aquaculture Statistics 2016 published by the Food and Agriculture Organization (FAO), global per capita consumption of fish grew 3.2% on average over the last 50 years. It was 20.2kg between 2013 and 2015 and continues to grow. During the same period, per capital consumption of fish in Korea was estimated at 58.4kg, the highest among major countries.
[Fish Species on the Brink of Extinction]
Meanwhile, ocean species are disappearing faster as seafood consumption has increased dramatically along with the exponential population growth in developing countries. Plus, extensive overfishing has significantly reduced fish stocks.
The UN Population Division estimated in 2012 that the global population, which was 2.5 billion in 1950 will grow to 7.5 billion in 2012 and reach 9.6 billion by 2050.
According to the WWF’s estimate, environmental pollution, illegal fishing and overfishing caused the marine vertebrate population to decline by 49 percent between 1970 and 2017.
In addition, concerns keep rising over food safety since the damage to the nuclear power plant in Fukushima and the subsequent detection of radioactivity in fish and vegetables.
For those reasons, stocks of fish, the major food staple for humans, are quickly declining. And concerns are rising that they might extinct in the not too distant future.
[Ways to Protect Ocean Resources]
In response, the international community has increased fish supplies via aquaculture, developed a clear set of standards on seafood production and adopted certification system to recognize compliant companies with the standards.
As a result, while 93 percent of the seafood consumed was from fishing in 1974, aquaculture accounted for 51 percent of all seafood supplies in 2014. In response, led by NGOs, guidelines have been set on eco-friendly seafood production to fight against illegal fishing and certified firms are given the right to use eco-labels.
[Another Non-Tariff Barrier]
Along with those efforts, a growing number of consumers and global retailers are recognizing the importance of sustainable aquaculture, contributing to a wide adoption of the international farming standards by sourcing certified seafood products first.
As explained in Figure 6, retailers such as Walmart, Costco and Carrefour as well as hotels chains including Hyatt Hotel have set guidelines on purchasing and handling certified seafood products and they are increasing the quarter of sustainable seafood sourcing.
Furthermore, major advanced countries today are taking non-tariff measures, such as customs procedures, inspection & quarantine, etc., in order to guarantee food safety and sustainability. A key example of this is the Seafood Import Monitoring Program (SIMP) of the U.S. The SIMP has been introduced to prevent seafood products identified as being particularly vulnerable to illegal, unreported, and unregulated fishing (IUU) and/or seafood fraud from entering the U.S.
The information to be collected under the SIMP includes producing entity (name and flag state of harvesting vessel, evidence of authorization to fish, type of fishing gear), seafood products, product form at the time of landing (quantity, weight, etc.), areas of wild-capture or aquaculture harvest and the importer’s information.
These strict requirements mean that producers and exporters need to get global certifications and keep records of all supply/export processes from production to distribution while the data they submit as proof has to be reliable. Seafood farms or retailers not prepared for these changes will be facing non-tariff barriers, thus suffering more seriously.
3. Blockchain for Greater Reliability
4. Use Case: Blockchain Supply Chain Tracebility Service
If you want to know more about Samsung SDS blockchain for Seafood Supply Chain Tracebility, visit Cellologologs.com and download White Paper.