3 blockchain applications to watch in logistics
Given a supply chain’s complexity, blockchain could be a game changer for the logistics industry.
The word "visibility" is commonly used in the supply chain world, and a lot of software companies are already addressing it. But it's also one of the most targeted needs in blockchain logistics applications, along with traceability. They're words that blockchain companies are touting as they begin rolling out pilots.
An average shipment can move between 30 different organizations, with more than 200 communications during its route. Given a supply chain's complexity and that many of the involved companies don't have compatible software, delays along the chain are common, and it may be difficult to know the location's holdup.
The supply chain, then, represents an opportunity for blockchain, a decentralized digital ledger which tracks information in protected blocks. "I see blockchain as a game changer," Brian Reed, a supply chain and blockchain consultant told Supply Chain Dive.
From the biggest noise perspective, "IBM is enabling the largest amount of action," Reed said. And it's not being done alone — each initiative has a partner. IBM has over 400 blockchain projects using Hyperledger Fabric. This year, IBM is also making news with a Maersk collaboration, developing a global trade platform for the shipping ecosystem.
From end-to-end visibility throughout the supply chain to specific functions, these three blockchain applications, along with IBM, are looking to address logistics hurdles.
The big idea
Like the IBM/Maersk collaboration, ShipChain wants end-to-end visibility.
"Not everybody is tracking the package from the manufacturer to the customer's front door. Different companies are focused on solving different problems," said Cherie Aimée, ShipChain's director of communications. ShipChain's Track and Trace product executes smart contracts between shippers and carriers. They work on the Ethereum blockchain, using individually encrypted geographic waypoints, so that only the parties involved in that shipment have visibility. The main blockchain documents completed contracts, after delivery and confirmation.
ShipChain's goals are to enhance transaction time, reduce fraud and theft, and eliminate freight broker fees, thus reducing cost.
They're building their system and recruiting large corporations as their first users. "We are in this to really disrupt a massive industry and these things take time," Aimée said. They're testing as they go, doing a pilot with Perdue Farms.
Companies like ShipChain are smaller than IBM, but gaining traction. "These guys are going to have the harder battle. They've got to have a solution that's outstanding and completely different than everyone else, whereas IBM walks in with the name," said Reed.
ShipChain introduced SHIP tokens, sold to pre-sale participants, which can be used to for its programs requiring token payment, and for its driver rewards.
The big idea
Modum, a Swiss company, provides data integrity for pharmaceutical companies. It is platform agnostic and uses smart contracts and external sensors to track environmental conditions for pharmaceutical products while in transit, and to verify the data when executing the smart contracts. While the sensors could eventually be used in other industries, Modum is focusing on pharmaceuticals, to help with regulatory compliance in the European Union, which requires proof that the products were maintained in certain conditions during transport.
Swiss Post, Switzerland's national postal service, announced recently that they would use Modum to deliver its pharmaceutical packages and other types of temperature-controlled products.
This type of company "extends the solution into the hardware side," said Reed. Requiring the sensors makes adoption more difficult. The idea of blockchain is being decentralized, flexible and interoperable with different players and technologies. "The more you focus it down, using only specific applications, you're restricting your success."
The company sold MOD tokens, which are used by buyers for profit sharing, not for use on the blockchain.
The big idea
Using the Ethereum platform and smart contracts, Hong Kong-based 300Cubits aims to reduce cargo rollovers and no shows. Shippers and carriers agree to a TEU token deposit, forfeited if either side doesn't meet their end of the contract. When Supply Chain Dive talked with 300Cubits last year, the start-up was still developing its contracting software and selling and distributing tokens. The booking deposit system had a few pilot tests this spring, and the booking system went live in June.
Reed questions whether blockchain and tokens are necessary for this type of system. "A lot of times you can get the same solution without blockchain. You can have auto payment on a procurement event, or a fines and fees angle, which is what (300Cubits) chose."
They're distributing proprietary TEU tokens to industry users at no cost through July.
The takeaway for supply chain leaders is to start learning. Companies like ShipChain know that technology like this takes time to develop and even longer to gain acceptance. Just like with the internet boom, once the momentum gets going, some companies will take off while others falter. As for which ones will succeed?
"We won't know the answer for another seven or eight years," Reed said.
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