Closed and sealed containers spend one-third of their journey time aimlessly waiting around. And because berths are scarce and costly, that is a regrettable state of affairs. Blockchain appears to be a suitable solution - to this and other problems - but most relevant parties are still unfamiliar with the technology. Using a case study, TNO and the TKI Dinalog Blockchain Consortium highlight the real opportunities for the container transport that blockchain can bring.
“Of the 40 days that containers travel from central China to central Europe, they spend around 24 days actually on the move, and 16 going nowhere,” says Tim de Knegt of the Port of Rotterdam, the party that supplies information and facilitates the logistics process. “One factor is the extensive paperwork, with the consignment note as the main registration and control document. But it is primarily due to the fact that the parties involved do not share information in real time. If a ship enters the port half an hour earlier or later, the lorry driver is unable to alter his own process.”
Reducing costs with blockchain
“The biggest problem with logistics is interoperability - that is, the sharing of data and real time status between parties,” confirms TNO senior advisor Wout Hofman. Among the areas he focuses on is that of blockchain for logistics. “A transport operation involves at least 20 to 25 parties: customs, port authorities, stevedore, freight forwarder, road carrier, shipper, consignee, bank, and so on. And these parties do business not just with Rotterdam, but with other ports as well. That is why we would like to move towards having an open environment. The ports already share information via the Port Community System, but it is expected that blockchain will help improve efficiency and further reduce costs. In the TKI Dinalog Blockchain Consortium, we are investigating how blockchain technology can be applied in the logistical setting of the port as effectively as possible.”
“We are investigating how blockchain technology can be applied in the logistical setting of the port as effectively as possible”
“By combining our technical knowledge of logistics and blockchain with our knowledge of the market, we believe we will find the answers to the many questions that that will raise,” continues Hofman. “Take legacy, for example - businesses are used to working in a particular way and have a certain apprehension about new technology. There is also the matter of commercial sensitivity. Companies are not necessarily keen to share their data. And there are issues relating to liability as well. If a company shares data, is it then liable in the event of adverse consequences?”
The partners in the consortium are envisaging a scalable environment that new parties can join very quickly. De Knegt: “As well as the legal and IT issues, it is scalability in particular that is a challenge. If you examine the bitcoin mining process, then the majority of parties has to approve the transaction in question. If you do so in a private environment, then that could run to thousands of parties in due course. We therefore need to find a way of securing agreements with each other very frequently.”
“By combining our technical knowledge of logistics and blockchain with our knowledge of the market, we believe we will find the answers”
“It’s a paradigm shift,” believes Martijn Siebrand of TKI Dinalog, the organization that awarded the grant and brought the parties together. “Each company currently protects its own silo with information, because having the benefit of more information is of real value. As soon as you open that information silo from the top and turn it into a joint resource, you can link up all sorts of processes to each other that currently run via e-mails, the interchange of electronic data, telephone, and so on. The interesting thing about blockchain is that you give a key to those who may view your data, although you pre-programme for how long and what specific data they may view.” Siebrand describes an example: “As soon as logistics service provider NBK has delivered the goods, the beneficiary signs for receipt and for the completion of the carrier’s task. This proof of delivery is watertight and is shared by TransFollow via the blockchain with ABN AMRO, whereupon the bank can finance the claim directly. All three parties have the same data source. This means that at the moment of delivery, ABN AMRO knows that the goods have been delivered, and with the TransFollow quality check, the bank knows the service has been provided and that the claim can be financed.”
Blockchain benefits everyone
“Blockchain benefits everyone who uses it,” says De Knegt. “That is a major difference with large e-commerce companies, for example, or social network sites that attract large quantities of data and claim ownership of that data, thereby becoming even more profitable. Here, it’s all about live and let live: we help each other to improve the process. Every additional hour that a vessel is moored up represents between 50 to 100 thousand euros in additional costs. Thousands of vessels enter the Port of Rotterdam every year, so the savings can be considerable."
“The interesting thing about blockchain is that you give a key to those who may view your data”
Things are moving so fast that the first commercial applications will be ready within two to three years. “We are going to develop an environment that offers smart contracts - that is, software that interested companies can use to link up to the technology and others can develop innovative services,” concludes Hofman. “I would be very pleased to invite interested businesses and app developers to get in touch. We are also taking our ideas onto the European market, by supporting the Digital Transport and Logistics Forum.” Siebrand: “Thanks to this outstanding interaction, we are putting the Netherlands firmly on the European and global map.”
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