New Kids on the Blockchain: Effect on perishables market

Trust innovation or perish

One of the more obvious types of cargo to be helped by blockchain will be temperature-sensitive cargo, such as food, flowers and pharmaceuticals, which must be kept at an optimal cool-chain degree range while traveling through some of the hottest and coldest places on earth. Tracy Kuhrt, a community architect at an organization called the Hyperledger Foundation, which seeks to advance open-source blockchain technologies across various industries, said that blockchain could help solve some of the problems found in the above seafood scenario. By using a blockchain framework called Hyperledger Sawtooth, one of the projects hosted by The Linux Foundation, a network of connected sensors (a.k.a. the “internet of things”) could be attached to virtually any object – in this case, individual fish – to provide a wide range of telemetry parameters, such as time, location, temperature, humidity, motion, shock and tilt. “The final buyer could then access a complete record of information and trust that the information is accurate and complete,” she added.

While the Hyperledger Foundation does not yet have members from the cargo industry, Kuhrt said the technology will likely be able to reduce airfreight fraud, due to the ease of tracking the chain of custody, and would also eliminate most of the human errors caused by today’s antiquated paper-based systems. Also, because of its ability to quickly clear up customs clearance disputes, blockchain will likely lessen the severity of cross-border supply-chain bottlenecks. Most importantly, she said, the decentralized nature of blockchain means no one entity is in control of the tracking process, which may add trust between parts of the supply chain and assure stakeholders that no one is stealing anyone else’s proprietary data.

Bytes on the ground

One of the earliest forays into blockchain tracking of perishable freight was A.P. Moller-Maersk, the Danish seafreight giant. After all, 90 percent of the world’s cargo moves by ocean, so it’s no wonder the first forays into blockchain involve container ships. In 2014, a team of Maersk IT specialists conducted an experiment tracking a 40-foot container full of time- and temperature-sensitive avocadoes and roses on a 6,500-kilometer journey from Kenya to the Netherlands. The plan was to document the entire twisting, turning journey of the perishables as they moved between modes and from handler to handler, so they could find a better way to digitalize the process.

From this research, Maersk determined that a typical ocean container shipment involves more than 200 interactions that include an average of 30 people – with each transaction leaving open the possibility of lost paperwork or an incorrectly transcribed tracking number. Clearly, there had to be a better way to ship food and flowers from one continent to another.

Soon after this test, Maersk partnered with Hyperledger Foundation member IBM, the technology that has been experimenting with various forms of blockchain, to handle transactions in its $44 billion global financing unit. One of the other sectors IBM is exploring is the ocean freight industry.

IBM and Maersk both said they intend to work with a network of shippers, freight forwarders, ocean carriers, ports and customs authorities to build a new global trade digitization solution, which is expected to go into production later this year. “We expect the solutions we are working on will not only reduce the cost of goods for consumers, but also make global trade more accessible to a much larger number of players from both emerging and developed countries,” said Ibrahim Gokcen, chief digital officer for Maersk.

The resulting blockchain format is called Hyperledger Fabric, built jointly by IBM and Maersk, which will eventually be made available to the shipping and logistics industry. This network will help manage and track the movements of tens of millions of shipping containers across the world by digitalizing the supply chain process from end-to-end. Though dollar figures are sketchy at this stage, IBM said that once the technology is adopted at scale, shippers may save “billions of dollars” in improved efficiency, eliminating about 20 percent of the actual physical transportation costs.

Since the fall of 2016, one of the largest retailers of edible perishables, Walmart, has been operating a pilot blockchain project to monitor the freshness of its produce, which feeds about 260 million customers each week, according to Bloomberg Technology. Blockchain can instantly identify older shipments and make it easier to pull food off store shelves before it goes bad. Also, if a customer is sickened by spoiled food, the perfect records maintained in the blockchain can instantly narrow down the source of the expired product – a formerly painstaking process that used to take days.