Blockchain In Transit: OpenPort Paves New Road to Shipping Traceability and Transparency
On a stunningly beautiful 70 degree day, I recently took a walk around the waters of San Diego’s Harbor Island area. While watching several ships motor toward the city’s two cargo terminals, I began thinking about the immensity of the global trade industry.
Today, global container trade is believed to account for over 60 percent of all world seaborne traffic, which in 2017 was valued at around 12 trillion U.S. dollars.
Blockchain technology’s potential utility in enabling traceability and transparency while boosting trade efficiency and cost effectiveness has been well documented. Coffee giant Starbucks is currently in the midst of an initiative to test this premise. Recently, the company which works with over 380,000 coffee bean farms worldwide announced a new pilot program testing the use of blockchain with farmers in Costa Rica, Columbia, and Rwanda. This study comes at a time when the applied use of blockchain with supply chain systems are garnering increased attention worldwide.
At the epicenter of this growing movement is Hong Kong digital logistics platform OpenPort — a company which is utilizing blockchain technology to create a new era of domestic distribution in emerging markets. Backed by a number of demonstrated use cases, OpenPort orchestrating a transparent, blockchain-centric space that fosters traceability, lower costs and improved cash flow for the global trade industry.
Max Ward, formerly the Head of Consumer Retail Asia for the global shipping giant DHL, and founder and CEO says he created OpenPort to bring transparency to supply chains and ensure all parties were rewarded fairly. Blockchain, as the technology matured, became the natural fit for that goal when paired with our technology stack, he notes.
According to Ward, Don Tapscott’s Blockchain Revolution and other books were an inspiration, but the micro-rewards concept was sort of an epiphany that came to him while in Vizag, India.
Says Ward: “The main problem within this industry is delayed cash flow due to the paper-based system of record keeping and compliance. This system has poor reliability, particularly in emerging markets. The often delayed and disputed paper trail slows cash flow and raises costs for all parties — which is exacerbated by layers of subcontracting in the supply chain.”
Ward goes on to note that those at the “bottom of the pyramid” are therefore poorly compensated for work performed while companies that ship goods suffer from a lack of information on their own supply chains leading to delayed cash flow. He believes that Blockchain offers the chance to deliver irrefutable transparency and, as we see it, a means to deliver new incentives to stakeholders.
When asked about the digital payment process that OpenPort has developed, he had this to say: “We take the delivery order (for goods order fulfilment) issued by a shipper’s ERP through our system and route it from transporter to driver with real-time tracking and shipment events forming an audit trail. We complete the cycle with blockchain enabled POD (proof-of-delivery) which is 2FA approved by the consignee. This is used to trigger an invoice.”
In terms of emerging trends tied to the convergence of blockchain and road transportation in emerging markets, Ward concludes: “We’ll see third party financial institutions providing favorable terms for blockchain solutions tied to domestic trade finance and later to international trade finance. This will apply first to the freight invoice value and subsequently to the goods value (roughly 50x the freight value).”