Everybody is talking about Blockchain: The technology promises absolute transparency and security for companies. How and why logistics companies in particular can benefit from the Blockchain is explained by Aljosja Beije from the Rotterdam BlockLab and Tim de Knegt from the port of Rotterdam.
Mr. de Knegt, why is the Blockchain technology so interesting for logistics?
Tim de Knegt: Blockchain has the potential to reduce transaction costs and improve efficiency along the supply chain. It can also enable new services along the supply chain and thus help logistics companies or banks to tap into new sources of revenue. For example, we are thinking here of inventory financing, where a company receives a loan on the basis of its inventories. Or to track goods during transport, for example, to track their current position or temperature.
Tim de Knelt, Port of Rotterdam
“If we follow the flow of goods along the transport chain, we can also dramatically simplify invoicing and interim financing.”
What is the role of the BlockLab in Rotterdam?
Aljosja Beije: We are a subsidiary of the Port of Rotterdam and bring together various partners to investigate specific applications of the blockchain – for example logistics companies, IT companies and banks. We also build up knowledge about different types of blockchains, such as Etherium and Hyperledger. In addition, we train students and employees of our partners so that one day they can become “blockchain engineers”.
Which applications are you currently working on?
Aljosja Beije: With a consortium consisting out of ABN-AMRO Commercial Finance, Exact Software, Innopay and NBK we did first pilot project deals with the already mentioned topic “Inventory Financing”. The project involves a manufacturer of electric bicycles and a bank. The company receives liquidity from the bank, with the batteries that have not yet been added the e-bike in the warehouse serving as collateral. Both parties exchange their data directly via the blockchain. This ensures that there are no manipulations. Without the blockchain, you would have to do a lot of work in order to determine the stock levels – for example with the help of stock lists. Or you’d have to set up a central data exchange through an intermediary. However, there are very few success stories in this area for small and medium sized companies. Confidence at low costs: This is how the advantage of the block chain can be summed up briefly.
Aljosja Beije, BlockLab
“In the future, financing along the supply chain will hardly be able to make more money.”
What is the status of this project?
Tim de Knegt: We started it a year ago and will start production operation at the beginning of 2018. At present, only the bicycle manufacturer and the bank are involved, but later on we want to offer inventory financing via the blockchain to other national and international companies, logistics companies and banks.
What other ideas would you like to implement with the Blockchain?
Tim de Knegt: If we follow the flow of goods along the transport chain, we can also dramatically simplify invoicing and interim financing. Today, 15 to 20 financing steps are often carried out along the supply chain by various partners, for which fees amounting to several percent of the value of the goods are charged each time. Blockchain and Smart Contracts allow you to handle the entire financing from start to finish via a single bank. This would reduce transaction costs by 20 to 30 percent.
Why should banks voluntarily forego this income?
Aljosja Beije: Because they have no other choice. In the future, financing along the supply chain will hardly be able to make more money. That’s why banks have to make the necessary adjustments – and whoever is at the forefront has an advantage over their competitors. But thanks to the Blockchain, new business opportunities are also opening up. For example, it provides a complete overview of the supply chain, and banks could earn their money in the future by selling risk assessments to their customers. Because they already know all about this today.