Blockchain adoption, pricing, and undeclaration in maritime dangerous goods transportation

Abstract

Introduction Shippers may undeclare maritime dangerous goods as general cargo to avoid the preparation time, documentation burden, and freight premium associated with dangerous goods transportation, creating serious risks for vessel safety, port operations, and the marine environment. This paper examines whether blockchain-enabled documentation can mitigate such undeclaration by improving provenance information and shortening preparation and verification time in the dangerous goods channel. Methods We develop a game-theoretic model with one carrier and a continuum of heterogeneous shippers who differ in their marginal willingness to pay for service level, and in which the carrier endogenously sets the dangerous goods transportation price. We characterize the equilibrium declaration behavior under a benchmark scenario and under blockchain adoption, and extend the model to settings with carrier competition and enhanced detection. Results Undeclaration motives vary with the service environment: when dangerous goods service is relatively low, service-sensitive shippers undeclare to access the faster generalcargo channel; when service is sufficiently high, price-sensitive shippers undeclare to avoid the dangerous goods tariff. The carrier’s profit-maximizing price therefore does not generally coincide with the regulatory objective of zero undeclaration. Blockchain adoption introduces two opposing forces: a service-enhancement effect that encourages truthful declaration and a cost-escalation effect that raises the dangerous goods price. As a result, blockchain reduces undeclaration only when documentation-time savings dominate the price premium induced by adoption costs; when this condition fails, adoption may increase undeclaration and reduce compliant shipper surplus. Discussion Blockchain-enabled documentation is not a universal safety remedy. Its effect on undeclaration depends on the interaction between documentation-time savings and the adoption-driven price increase, and the extensions with carrier competition and enhanced detection show that blockchain deployment should be evaluated jointly with pricing, detection, competition, and regulatory policies.