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In the blockchain race, supply chains stand to gain the most

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The idea of blockchain started out packaged as a use case that attempted to replace government-regulated fiat currency with cryptocurrency. However, it has expanded dramatically  since then, with use cases being identified across a myriad of segments including finance, energy, supply chain and defense. In all likelihood, cryptocurrency could be called a precursor to the potential of blockchain, a use case that made people sit up and take notice about an underlying technology so promising that it could revolutionize the way we look at privacy and digital transparency.

Blockchain, by definition, is an immutable distributed ledger. Put in layman terms, blockchain can store and relay information in a secure manner, with its content being distributed and controlled by all the stakeholders in a network. No single stakeholder can claim absolute authority over the network, nor can any single party edit information stored in the system without the explicit consent of every other stakeholder in the system. This ensures visibility and transparency – two vital parameters that have remained elusive across many segments for decades.

Though blockchain brings in a reasonable amount of sophistication to different verticals, it makes sense only in scenarios where it can be integrated seamlessly with minimal disruption to everyday operations. A Gartner report analyzed the hiccups that different industries would face while implementing blockchain, and pointed out that 75 percent of public blockchain programs would suffer from “privacy poisoning” – an issue complicated by privacy laws and government regulations.

However, even in the midst of such issues, there are only good things to say about blockchain adoption in the transportation and logistics sector. In many ways, blockchain would be a perfect solution to many issues that plague the industry – opacity across network nodes, an extremely fragmented marketplace, multiple stakeholders and mediocre visibility.

Take the case of trucking, for instance. Trucking is a massive industry in the U.S., accounting for over $720 billion in annual revenue, representing 81.5 percent of the country’s total freight bill. The sector suffers from severe fragmentation, with 90 percent of the trucking fleets owning six or fewer trucks. These extremes create a situation where shippers lack transparency into available trucking capacity, while truckers log thousands of deadhead miles, missing out on hauling opportunities due to network opacity. Blockchain, if appropriately implemented, would help to bridge this disconnect.

To bring this to fruition, it is essential to create blockchain standards for the industry, by working alongside all the stakeholders who take part in the marketplace. A non-profit association, the Blockchain in Transport Alliance (BiTA), is working to create open blockchain standards for the industry at large, by pooling in hundreds of stakeholders across the world, and constructing a framework over which blockchain applications can be developed. The key here is “open standards” – which essentially means that any company willing to build a blockchain application can do so without worrying about proprietary issues or infringement laws.  

Despite the efforts of BiTA and others, blockchain implementation does come with its share of complexities. For starters, blockchain can only be effective if all the stakeholders in the ecosystem trust the framework and share information without being suspect of data safety. Much needs to be done to convince businesses to trust blockchain and provide the necessary information; an exercise that could take a while. Companies must also move towards data standardization, wherein all the data that is captured would have the same yardstick of measurement, making it easier for data to be shared and attributed with an intrinsic value.

SAP conducted a survey last year, asking its clients about their willingness to work on blockchain-related pilot programs. An overwhelming number of responses were positive, with 84 percent of the queried companies already involved in building use cases around blockchain. Though a large portion of these pilot runs has still not translated into commercial applications, the engagement with blockchain can be taken as a step in the right direction.

Supply chains have much to gain from blockchain applications, especially the ones where consumer health is at stake – like those involving the pharmaceutical or food supply chains. Blockchain paired with the industrial Internet of Things (IIoTs) could help prevent bad actors from injecting counterfeit or expired products in the mix.

Technological advancement has shrunk some IIoT devices to become smaller than a grain of salt. These devices can be attached to products as they move along the supply chain, helping to  identify their origin and the stakeholders it passes through. Storing this information on a blockchain network would help not just with visibility, but also with transparency – reducing the friction between shippers and consumers.    

The future of blockchain in the freight industry depends heavily on industrial cluster adoption and the reception it gets from each facet of the supply chain. On paper, blockchain does appear to be a technology that is tailor-made for the freight market, but it remains to be seen how effective its translation will be in real-world applications.

Consolidation in transportation technology is on the horizon: Vancouver panel

FROM L TO R: DEAN CROKE, FREIGHTWAVES; DEVLIN FENTON, GO99; SCOTT SHANNON, C.H. ROBINSON; SPENCER ASKEW, TEKNOWLOGI ; JOHN KINGSTON, FREIGHTWAVES

FROM L TO R: DEAN CROKE, FREIGHTWAVES; DEVLIN FENTON, GO99; SCOTT SHANNON, C.H. ROBINSON; SPENCER ASKEW, TEKNOWLOGI ; JOHN KINGSTON, FREIGHTWAVES

On a stage full of market participants who are offering various technology solutions to the transportation sector, there was basic agreement on one thing – big change through consolidation is coming in the structure of the companies now serving the industry.

In particular, Devlin Fenton, the CEO of freight matching app Go99, said you need to look no further than other industries to see where things might be headed.

There are markets where the key online platforms have been reduced to three players, “and I would imagine this would happen in the transport space,” Fenton told a panel during lunch at the Canadian Cargo conference in Vancouver. (Full disclosure: I was the moderator of the panel.)

Scott Shannon, the vice president of North America Surface Transportation for C.H. Robinson (NASDAQ: CHRW), noted that the consolidation wave already hit the load board industry years ago. “There were hundreds of them and that has been whittled down to a few core high- performing companies,” he said. C.H. Robinson now regularly exchanges information with them, though at one time, he reminded the audience, load boards were going to put companies like C.H. Robinson out of business.

Fenton’s company in particular is in a fiercely competitive sector of the trucking and transport world  – apps that are used to match carriers and shippers, a market that has a big carrier at its center (J.B. Hunt with its Hunt 360 platform) and numerous other participants, including those at third-party logistics (3PL) companies. Fenton said there has been plenty of investment interest in the field, with millions of dollars flowing into some of the larger companies.

“It is a massive space for us to compete in.” Fenton said of the number of other companies seeking market share. But at the same time, the size of the customer base  – shippers, carriers and 3PLs who need the applications  – ”is inordinately large, in the hundreds of billions of dollars.”

But there’s differentiation, he said, pushing back against the moderator’s question regarding whether all the tools did the same basic thing. Fenton wryly noted that in Africa, not all lions think they’re competing with all the other lions. Fenton said Go99 has attempted to differentiate itself by different workflows, specializing in certain types of cargoes as well as certain types of lanes. “What anybody in the space will tell you is if you’re active in a certain type of commodity or certain lanes, you will find those who move in those circles,” he said of the benefits of differentiation. When you’re in a field like that, “you benefit from the entire aggregation rather than just the network you had access to,” according to Fenton.

Without going into specifics, Fenton also said the Go99 app is heavily oriented toward “the way we move money. It makes us more of a financial transaction company rather than a freight company,” he said.

Another growing area for technology applications in the sector is artificial intelligence (AI), the basis for the platform offered by Teknowlogi. The company’s founder and CEO, Spencer Askew, a member of the panel, described his AI offering as “super neutral and very agnostic” that can work with existing platforms rather than trying to displace them.

The lunch panel’s focus was on e-commerce, and Askew described some of the types of things that the AI offering of Teknowlogi can do. He described it as producing a newspaper dated one month in the future. “You need intelligence to predict buyer and seller behavior,” Askew said, so taking AI and laying it on existing transportation management systems (TMS) upgrades that TMS to what he called a “terminal logistics expert system.” And when that happens, Askew said, it allows the entire organization “to start predicting.”

Shannon of C.H. Robinson reminded the audience several times that at the end of the process, people remain. And when digitization and automation have displaced more manual labor processes, “it leaves the strategizing to us.”

Robinson has numerous freight-matching apps offered through its Navisphere brand, having been in the freight matching business for more than 15 years. “They’re specific for carriers, we have another for drivers and what it does it puts information into the hands of people like you who will be making the decisions,” Shannon said, returning to the theme of people being ultimately at the root of the business.

Shannon agreed with the  need to connect that information seamlessly into telematics, but made an argument for a bigger company like Robinson being in the best position to do so. “Having the scale to do that is critically important,” he said.

With all the apps and new platforms flying around, Dean Croke, chief insight officer at FreightWaves, reminded the audience that technology developments seem to be ignoring one of the most important apps of all: the electronic logging device (ELD). Most drivers are using that as their only technology platform, and if they’ve got an app that asks them to rate the performance of, for example, conditions at the distribution center of a shipper, they’re not likely to engage a second app beyond their ELD.  

“Everyone is trying to invent the killer app and they won’t be used,” Croke said. “If I was inventing something today, I’d be working with the ELD manufacturers to provide that level of transparency.”

Croke also regularly represents’ FreightWaves’ Blockchain in Transport Alliance (BiTA) on panels, and this one was no different. BiTA’s primary goal is to help create standards in the industry, and they can be very granular, even down to the level of how dates are entered into spreadsheets that might later be distributed along a blockchain platform.

Fenton said that Go99 is working to get “blockchain ready.” That can include things similar to what Croke described. He cited as one example the simple act of how does one save a presentation in PowerPoint or other applications.

Convoy sponsors Shipper of Choice Award

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Convoy has partnered with FreightWaves in support of the inaugural Shipper of Choice Award, which will highlight the top 25 shippers in America as voted on by carrier-members of the Truckload Carriers Association (TCA) and the Blockchain in Transport Alliance (BiTA).

The nomination process opened earlier this month and will close on March 1. There are no restrictions on nominations; a shipper can nominate itself or other shippers, and carriers may also nominate shippers. A shipper is defined as a company that sends or transports goods by sea, land or air. Nominations are an open call via www.freightwaves.com, www.bita.studio, and/or www.truckload.org. There are no restrictions on nominations other than the nomination form must be completed and submitted via one of the three aforementioned websites.

“The Shipper of Choice Award will increase transparency and highlight innovative best practices that keep freight moving,” said Craig Fuller, founder and CEO of FreightWaves. “We are very appreciative that Convoy agrees, and has become the sponsor of this award. The phrase ‘shipper of choice’ is often used, but for the first time, industry members will nominate and vote on the best shippers and they will be quantified and ranked.”

Just three years after its founding in Seattle by two former Amazon executives, Convoy has become a powerful nationwide trucking network and platform for both shippers and carriers. The company reached a unicorn valuation and was voted #4 in the 2018 Freight.Tech 25.

The idea behind Convoy is relatively simple – automate the time-consuming, error-prone process of matching loads to trucks. Eliminating human intermediaries through its app, Convoy offers the most dynamic services to its shipper customers and passes through more money to its carriers. Its breakthrough app and several services introduced in 2018 help to reinforce Convoy’s mission “to transport the world with endless capacity and zero waste.”

"We are thrilled to be working with FreightWaves to recognize forward-looking shippers at a time of profound change and exciting innovation in freight management," said Dan Lewis, Convoy CEO. "The Shipper of Choice Award highlights shippers who are leading the way, along with best practices that can benefit the industry."

“This award fills a large void in our industry,” TCA President John Lyboldt said. “Too often, industry participants focus on the negative – what’s wrong with our collective supply chains. The Shipper of Choice Award focuses on the positive, and we expect shippers to seek out this recognition. It is complementary to TCA’s work with the Best Fleets to Drive For initiative – recognizing those carriers doing culture-building things for their employees and contractors.”

Representatives from FreightWaves, BiTA, TCA and the greater broker community make up a selection committee to narrow nominations down to the Shipper of Choice 100. From there, carrier members in good standing from BiTA and TCA will vote on the Shipper of Choice 25.

Arlen Stark, FreightWaves’ Executive Vice President of Research, said, “All three organizations – FreightWaves, BiTA and TCA – are proud to begin this award, and look forward to the announcement of the winners!”

Katz, Sapper & Miller (KSM) will manage the Shipper of Choice vote to ensure a credible and independent process. KSM managed voting for FreightWaves’ Freight.Tech 25 Award in 2018. Tim Almack, partner-in-charge of KSM's Transportation Services Group, said, “KSM is honored to assist FreightWaves, TCA and BiTA recognize America’s top shippers. The Shipper of Choice Award honors those shippers who not only know what is important to carriers and their drivers, but also bridge the knowing-doing gap and actually take actions to collaboratively work with carriers and drivers to eliminate inefficiencies in the supply chain.”

Voting for the Shipper of Choice Award will open on March 10th via www.freightwaves.com, www.bita.studio, and www.truckload.org in conjunction with the 81st Annual TCA Convention in Las Vegas (March 10-13). Voting will close on May 1st, and winners will be announced on May 8th at FreightWaves’ Transparency19. The award reveal in Atlanta will be delivered via a sealed envelope presentation by KSM.

To vote, carriers will complete a short five-question survey on each shipper, ranking qualities such as flexibility and detention on a five-star scale, with possible total score of 25 points. The shipper with the highest score will receive first place while runners-up will be awarded based on score.

“Each shipper will have shown its commitment to the professional driving force by providing accessible facilities, treating drivers professionally, optimizing a driver’s time by keeping detention to a minimum, and by providing consistent processes for loading/unloading,” Stark explained. “To be a Shipper of Choice, each shipper will have proven to be the best at their part in the supply chain.”

Following Transparency19, FreightWaves’ editorial staff will publish a feature article on each Shipper of Choice.

Blockchain-as-a-business startup Inxeption builds futuristic ecommerce platform

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Blockchain has had an impact on logistics businesses looking to work on the edge of technology, as it can bring in transparency and accountability into supply chain operations. Inxeption, a California-based startup has developed an ecommerce platform built over blockchain, allowing business-to-business (B2B) companies to sell products online.

“It is an integrated platform that takes you all the way from product definition to the actual transaction, followed up by marketing,” said Farzad Dibachi, CEO and co-founder of Inxeption.

Dibachi outlined three different applications that act as the platform’s fulcrum. “The first one is what we call the product ledger. This becomes the system of record for the company to keep the product definition in, while allowing collaboration between the buyer and the seller around the product,” he said.

The second element of the software is called the “super cart” – Inxeption’s take on the conventional shopping cart, by adding features to it apart from it acting as a basket for transactions. Dibachi described it to be a cross between a shopping cart and a chat box; something that can communicate and collaborate between stakeholders while also working out the transactions.

“The third element of the software is analytics, which provides data on who is buying, what they are buying, and where they are coming from. We combine all the three applications and combine them onto a single platform,” said Dibachi. “It has been 15 months since we founded the company, and we’ve signed up about 125 customers. We are also announcing a partnership with UPS for our logistics services.”

In essence, Inxeption’s core competency lies in helping people sell things online, and its recently cemented association with UPS is strategic to its interests as that helps sort out the logistics needs of its clients. “UPS has made an equity investment in Inxeption. We are working with them to make the process of logistics as simple as possible for our customers,” said Dibachi.

The idea is to have an ecommerce platform that can dynamically change in real-time. For instance, if a product manager modifies the product definition, it immediately shows up on the ecommerce website, and he can use the analytics to see client movement on the platform – where they are and what they are looking to buy. Using this, businesses can dynamically change prices, making it more likely for consumers to buy the products they view.

“All you need to do is bring your product to the table, and we will put all the other services and software pieces together for you to be able to sell that product online. You can think of us like a distribution-in-a-box,” said Dibachi.

The product market fit of Inxeption is beyond doubt as the company was borne out of Dibachi’s personal need, when he was running an LED lighting business. “The idea for the software got started when we were trying to take the LED lighting company online. We started writing code for the company, and it turned out to be the precursor to our product definition tool,” he said.

Inxeption’s clients range from companies making $500,000 in yearly revenue to multi-billion dollar a year businesses. What pulls them towards Inxeption is the ease at which it removes the internal organizational silos that slow down growth and induce operational redundancy.

“If you want to sell a product online, you need a design engineer, manufacturing engineer, people from product management, marketing and sales – everyone needs to be involved before a product is put up. These are silos that slow things down,” said Dibachi. “It takes products a long time to get to the market. With our platform, product managers can directly enter the market and see their customers’ reaction. This is something that is exciting to our customers, as they don't need intermediaries any longer to make changes.”