Logistics, and the last mile, depend on documentation. The processes of finding where things are, where they’re headed and when they arrive are mired in paper.
Inefficient handling of goods as they’re shipped, regardless of modality, can boost costs, lead to disputes between trading partners and even delay delivery.
The movement toward digitization can solve the paper chase and may get a boost from blockchain.
One firm, OpenPort, headquartered in Hong Kong and focused on supply chains based in Asia, has targeted the roughly $150 billion spent annually on road transport in the region that helps move $6 trillion of goods.
(Last week, OpenPort entered into a Letter of Intent for a reverse takeover with Canoe Mining Ventures, based in Canada. OpenPort confirmed with PYMNTS that the merged entity will be branded OpenPort and will continue the operations of OpenPort Limited.)
Proof of delivery (POD) is key, and yet it remains tied to manual and paper-based recordkeeping. OpenPort offers ePOD, or POD delivered electronically, where truck drivers can use their phones as a conduit to documentation via image capture.
The company leverages smart contracts and the OpenPort token to connect payment to the actual movement of goods.
OpenPort said earlier this month that it had launched a joint venture with XVC Logistics, which is based in the Philippines.
Through that partnership, the duo debuted “OpenPort Solutions” through which shipping payments were conducted in bitcoin and service payments in Ethereum. The joint venture also launched the electronic proof of delivery program.
In a statement tied to the launch, OpenPort CEO Max Ward said the solution will provide better market liquidity for transporters and irrefutable transparency for shippers. The company has said it provides real-time status updates from the beginning of shipping — the tender — to final delivery.
In an interview with PYMNTS, Ward stated the partnership aims to solve a number of problems in logistics. Cash flow, he said, remains a major issue in the industry, as does providing liquidity for transporters.
“Traditional methods are paper-based and prone to significant delays and disputes in settlement, which can take months to resolve,” he told PYMNTS.
Detailing the mechanics between the two companies, Ward said “XVC is a transporter that OpenPort has paid to make several shipments (in bitcoin), and XVC later paid OpenPort (in Ethereum) for use of our Transport Management Software (TMS).”
He said the payments were made to test the feasibility of cryptocurrency in this commercial context.
“As for the two currencies used, it is because they are the two most popular, and it is what the two companies were both comfortable testing and implementing. Ultimately, this was a case of two blockchain-friendly companies testing and learning together in our path towards the joint venture.”
A digital process can speed up cash flow and increase transparency, but digital documents are not yet trusted and widely adopted, he said.
“Blockchain-based document records, because of the associated irrefutability, are more trusted … Smart contracts can be used as conditions — decentralized business rules to enable decisions and improve cash flow,” Ward said. Mid-size firms are the early adopters here, together with local financial institutions.
He noted that, regionally speaking, the pact serves Asia, where “we see more fragmentation, layers and delays on cash flow … but we see the same business problem in other emerging markets. We are looking to scale into Africa and the Middle East soon with partners.”
“In addition,” he continued, “we also see demand for blockchain TMS in mature markets, such as North America and Australia.”