Long fuse, big bang – this is how the current standpoint as well as the potentials in the digitalization of the logistics sector can be described. In addition to the mega topics autonomous systems (driverless transport vehicles, drones), IT (infrastructure / platform / software as a service), data collection (sensors, RFID), assistance systems (AR / VR, Pick by Light / Voice) Blockchains arises as the the next big challenge. CHAINSTEP introduces the most important blockchain usecases from the fields of supply chain management and transport logistics.
Public and Enterprise Blockchains can differ significantly. This is utilized by tech giants like IBM, which provide their own blockchain cloud services based on the hyperledger blockchain developed by the Linux Foundation. Users can program interfaces, applications and APIs. Maersk, the world’s largest container shipowner, used the IBM architecture in their much-respected blockchain prototype. The Chinese SCM company Hejia is also trying to improve healthcare financing using IBM’s blockchain tools.
CHAINSTEP assessment: IBM focuses on Enterprise Blockchain solutions. These does not take advantage of the complete features of a blockchain system, but this is often a useful approach for B2B applications – especially in the area of tracking & tracing. A very valuable contribution to testing the new technology under real business requirements.
The Walmart retail group also focuses on IBM’s blockchain expertise. For example, the two companies have been operating three nodes since last autumn to better track the origin of pork in China. Even ten nodes will save billions of dollars. Walmart also uses the blockchain technique to track delivery drones, and monitors, among other things, location, temperature, critical thresholds, and transfer points.
CHAINSTEP assessment: Walmart has understood that blockchains can optimize existing business models as well as open up completely new business fields.
Microsoft is also positioning itself with the “Project Manifest” and by working with the Startup Mojix in the supply chain environment. Data generated by RFID, bluetooth or GPS sensors are protected in this project via the blockchain and help to minimize costs for audits, insurance, financing or damage claims. Project participants are assuming that the savings achieved so far are sufficient to drive further technical development.
CHAINSTEP assessment: “Manifest” is still at an early stage. It remains to be seen which approaches in combinating identifiers such as RFID and the blockchain will be used in future within supply chains.
Blockchains as new platforms
For more than 18,000 customers from 167 countries, essDOCS takes care of the realization of paperless solutions for trade, finance and logistics. In March 2017, the company announced that it was now working on a prototype that would deliver the initially electronically available freight data to a distributed (and therefore secure, cheaper and less error-prone) blockchain ledger.
CHAINSTEP assessment: In order to maintain their business models, more and more platform vendors are starting to implement blockchain solutions. This increases the risk for so far little digitized industries and companies to lose market shares.
However, existing public blockchains are not technically designed to allow, for example, a massive machine-to-machine communication on the Internet of things. Skuchain addresses this problem by aggregating supply chain sensor data (eg temperature fluctuations) before events are triggered on a blockchain. The company wants to market the collected data and thereby enable its partners in the transport of goods to benefit from an increase in efficiency and transparency.
CHAINSTEP assessment: Skuchain is just an example as operators from foreign industries – no team member has logistics experience – can suddenly become relevant. In addition, the solution considers the current technical development.
Provenance is a British tech start-up that enables retailers and brands through blockchain to increase transparency and data integrity within supply chains. Specifically, retailers can display up-to-date information about the product at the POS in real-time, as well as show the authenticity of their products and ingredients to producers and consumers. Each product gets a (digital) story.
CHAINSTEP assessment: Provenance is a great promise for the transfer of fair trade principles to the rest of the production of food and goods. Supply chains become a basis of trust in the future.
Already one step further is AgriDigital. As early as December 2016, the company converted the first live trade of grain through a blockchain. Farmers have the problem that they often do not know when, at what price and whether they are paid for their products – the Australian company wants to change that. 2017, a blockchain-based product is to be launched, which makes records from the supply chain visible to buyers and consumers.
CHAINSTEP assessment: The solution has the potential to shift the forces in the agricultural industry away from the corporations to producers and consumers. Both benefit from an increase in transparency and trust.
Blockchain projects at European ports
In the Netherlands, TU Delf, ABN-Amro, Port of Rotterdam, Royal Floral Holland, Smartport and eleven other partners have joined forces in a consortium to implement concrete blockchain projects in the logistics sector. Since the start in November 2016, a total of 2.2 million euros has been made available for a project duration of two years. Et al is about the financing of blockchain implementations as well as at various points in the supply chain.
CHAINSTEP assessment: The maritime economy in Europe is no longer just discussing the blockchain potential, but is also involved in concrete projects.
The ports of Antwerp and Singapore have begun to operate a blockchain solution that offers truckers, loaders and other parties greater security in the coordination of container releases. Currently, the PIN code is transferred in an unencrypted form when the containers are handed over – this is to change with the use of the blockchain. In addition, the collaboration of these two ports will reduce costs and eliminate process-increasing intermediaries.
CHAINSTEP assessment: Up to 50 percent of cost savings in freight logistics are a tempting bonus for the implementation of blockchain technology. Winners will be the ports which are also developing new business opportunities with blockchain support.
Publicly promoted blockchain-consortia
The Finnish city of Kouvola received a total of 2.4 million euros from an EU fund to finance cross-border cooperation projects between Finland, Estonia, Latvia and Sweden. Since autumn 2016, the project has been working with IBM / Hyperledger to develop a global blockchain solutions for the logistics industry: freight containers are to become intelligent and can make their own decisions regarding route planning and tenders using smart contracts.
CHAINSTEP assessment: It is not necessarily the smartest idea that wins the digitization race, but the one which is fastly implemented and constantly improved. The EU choice might have just have been a very good one.
The unfamiliarity of a digital bill of lading within in the transport and logistics sector proves to be a constant challenge: Inadequate standards, media breaks and numerous interfaces / software platforms prevent automated processes, especially for multimodal traffic routes, and provide billions of costs for transport delays. A project funded by the German Federal Ministry for Research and Education is currently being launched in Hamburg. “HANSEBLOC” wants to take on these problems by using Blockchain.
CHAINSTEP assesment: CHAINSTEP is involved with HANSEBLOC together with partners in the requirements analysis and would like to contribute to the creation of the system architecture. We hope that this will provide an important building block for the digitalization of the German economy.