How digitalization serves freight forwarding
Q&A with CargoX Founder and CEO Stefan Kukman about the disruptive potential of blockchain in logistics, getting the industry to adopt new technology, and how a small startup from Slovenia is taking on the shipping business.
In your opinion，how does the block chain change the shipping trade?
Stefan Kukman: Blockchain provides several benefits to the shipping industry. The most important is the reduction in costs and manual labor, with the highest level of safety for users.
Our technology eliminates the costs and time associate with completing, transferring, and processing paper bills of lading, which adds up to billions of dollars every year. In addition to that, many processes can be automated once payments are integrated in smart contracts.
Apart from that, all actions are irreversible and time-stamped, which means there’s less room for dispute over ownership and liability ect.
How to promote the practice of electronic bills of lading? How safe is CargoX's new technology?
Stefan Kukman: Adoption and use of Smart B/L, our blockchain-based bill of lading platform, is easy and user friendly, and that’s the key to getting it into people’s hands. Our goal is to make it so easy to switch to our system that there’s no reason not to. We’re making it readily available to all companies along the supply chain, from logistics companies to importing and exporting companies, and we’re making it low-cost.
Our blockchain-based smart contract is completed by the logistics company (either through an API or manually) and all that their customers need to do is sign the transfer of ownership once the payment has been received. Basically, we’re providing an easy way for companies to eliminate time-consuming and costly procedures from their operations. That’s how you get people to adopt new technology. You make it profitable and easy to use.
Blockchain technology is the safest technology known today. There are no central storage / servers which hackers could attack, all data is irreversible and cannot be changed without the approval of all the parties involved. Even if (in the worst case) our application is not operating, all data is permanently written on the blockchain and will be accessible to all those who are allowed to see it (involved parties with private keys – the importer/exporter/logistics company).
How is CargoX innovating with block chain technology and paperless bill of lading?
Stefan Kukman: CargoX is about to launch the world’s first blockchain-based application that reduces the cost of global trade reduce and bring an end to the use of paper B/L shipping documents. Apart from the benefits described, Smart B/L will also increase supply chain visibility. Because it’s an open platform, CargoX will allow for easy integration by other 3rd party providers. This means that our blockchain Smart B/L will also have the functionality of showing the origin of goods, the current location of the goods, electronic archiving of documents, and other critical trade and visibility information.
With the integration of settlement solutions (which we are partnering with MakerDAO to develop) there is the option for payment guarantee for trading companies, as well as credit for small businesses at a much lower interest rates than they can get from banks.
In short, we expect CargoX to become a fully encrypted, market neutral trade platform where the logistics and trade communities can transact and manage their shipments from end-to-end without worrying about the safety of their data.
What is the market promotion at present? Is it interested in the Chinese market?
Stefan Kukman: We have just started promoting our Smart B/L blockchain application here in Europe, and in just a few weeks we have already attracted many partners and supporters. China is our biggest and most important market, because global trade depends heavily on Chinese exporting companies. We are attending the Canton Fair this spring and we will promote our product to Chinese exporters and logistics companies. We will contact Sinotrans, as having such a partner would be a win- win situation. Our Smart B/L would allow Sinotrans to pass on significant cost savings to its customers and make it one of the first shipping companies to offer its customers and partners a paperless solution which is user-friendly and offers the highest level of security.
There are thousands of other Chinese importers, exporters, and logistics companies that could save time and money with Smart B/L and gain a competitive advantage. CargoX provides a global trading platform that gives smaller companies the same advantages as the big ones by letting them instantly transfer ownership of shipments. As the world’s largest exporter, China is one of our most important markets and we are doing everything we can to reach customers there.
What are the development resistance of smart bills of lading? How to overcome it?
Stefan Kukman: Actually, there is no resistance, and the shipping industry is very excited about the switching to blockchain. We were exploring all possible scenarios months before the we conducted our $7 million ICO funding, and we focused on house B/Ls. We found that there are no impediments to this technology within the shipping industry. Cryptocurrency use could be a bit of a challenge, because the largest logistics companies are not yet buying CXO (CargoX tokens needed for B/L issue), therefore we will do this for them and credit their accounts.
Could you introduce CargoX for our reader? At the beginning, why did you want to develop and build the digital bill of lading?
Stefan Kukman: I have been in the logistics sector for decades and it makes no sense to me that we are still using paper in 2018 to transport document or legal ownership of goods. Before blockchain, there were attempts to create an electronic bill of lading, but this never got very far. There are several reasons for that. Now with blockchain we can have a +1/-1 method, meaning that once I have sent the ownership token to the other person, I don’t have it anymore. Just like sending money through a bank. As soon as I click send, it is gone from my account. Blockchain and our application offer the same thing to bill of lading owners. Once the exporter gets paid, it only takes one click to transfer ownership to the consignee, and they need to sign the transaction with their private key (Trezor, Nano Ledger, JSON file). The moment they do that, they lose ownership of the goods and transfer ownership to the consignee (importer).
Once the containers arrive at the port of destination, the release agent already has the ownership token and he can release the goods to the importer. All this can be done in minutes, from the origin to the destination, with much lower costs, higher security and less bureaucracy.