The global logistics market is big.
It encompasses all methods of transportation: container shipping, air freight, trucking, trains and vans, plus the organizations that coordinate multi-step transactions. Transporting a container from Kenya to Amsterdam may involve 200 communications and 30 parties.
This size and complexity has made it difficult to create one comprehensive system that enables everyone involved to track every step of the logistics pipeline. ShipChain thinks it can tie together this massive industry via one blockchain platform.
“It will be able to track products and packages from manufacturing through the supply chain to the customers’ front door,” Cherie Aimée, ShipChain’s director of communications, tells ThirtyK. “It enables us, in a massive trillion dollar industry that has a lot of parties involved and is fragmented, to pull everybody together and record all these transactions that take place through the supply chain on a public ledger, or a blockchain.”
“Blockchain is a truly disruptive technology,” says Peterson. “It has potential to change many facets of life and global commerce.”
ShipChain’s solution comes as the logistics industry is likely to grow stronger. This is a byproduct of the increasingly global economy. In 2015, logistics estimated global value was $8.1 trillion dollars, and Transparency Market Research expects that to rise to $15.5 trillion by 2023.
Targeting Pain Points
The system will allow users to skip the third-party shipping broker, aiming to reduce costs. By using smart contracts and sidechains, ShipChain plans to increase accountability for lost, stolen or damaged freight, and incentivize drivers, for example, for efficient behavior. Aimee says that companies use different software systems and that “some are still tracking using paper.”
“None of these different modes of software are communicating with one another, which is what ends up blocking the communication, and understanding what’s happening with the containers and packages,” Aimée says. “Our platform will enable existing software platforms to integrate with theirs.”
This isn’t the first blockchain application in the logistics and shipping market, but ShipChain believes it is the only one covering the entire transport supply chain. Because of its size, “everybody handles a different portion of the industry,” Aimée says. Last fall, IBM and shipping line Maersk announced a joint venture to manage shipping containers globally.
ShipChain’s business plan is to integrate large companies like Maersk first. To help them do so, ShipChain has added advisers including Chris Perdue of the AgriBusiness poultry giant Perdue Farms and Al Pettenato, a former SVP of transportation company DHL. DHL’s former CEO Roger Crook, is the company’s Chief Strategy Officer. By starting large, “it will pave the way for the other companies to realize they’ll have to get on board technology wise,” Aimée says.
Other large companies in the logistics field, such as UPS, are already looking into blockchain. “Blockchain is a truly disruptive technology,” Kyle Peterson, UPS spokesman, tells ThirtyK. “It has potential to change many facets of life and global commerce. We believe it may be an important innovation that could facilitate international trade, and we are evaluating it from a business perspective.”
Disrupting an industry as large as global logistics takes time, and ShipChain’s stated timeline currently goes through the first quarter of 2020, with air and sea freight pilot programs beginning at the end of 2019. The company is currently doing a freight tracking trial with Perdue Farms. When the system eventually goes live, it will rely on the company’s proprietary ERC20 SHIP tokens and fees for using the site. “We’re absolutely on track with our road map,” Aimée says.