By Tamanna Dahiya, Director, Asia Pacific Innocation Center, DHL
2018 was the 10th anniversary of the global financial crisis that inspired the creation of blockchain technology. It was also the year that blockchain emerged out of Bitcoin’s shadows, gaining recognition as a technology with strong merits beyond the cryptocurrency. In industry conferences worldwide, it has been deliberated as a “trust” disruptor that could in fact create greater trust and collaboration in complex ecosystems – thanks to its transparent, traceable and secure features.
But whilst critics may point out that much isn’t happening on the ground, a 2018 Deloitte study revealed that 74 percent of traditional businesses envision practical use cases for blockchain. At a trend talk organized at the DHL AP Innovation Center in May 2018, many questioned if decentralized databases could be safer than centralized ones, and how one could maintain control of operations when these are mostly unregulated at the moment. Lack of awareness, clear engagement rules, standards and regulations, as well as early stage start-ups and platforms, are some of the key challenges which need to be addressed.
Potential to boost global trade
To understand blockchain’s potential, one needs to imagine a scenario in which all industry partners collaborate on one common “internet-linked” backbone where all data important for common transactions are uploaded by different partners and are easily visible. Data is secured and logged chronologically, leaving a single version of auditable trail which cannot be edited or tampered with. At the same time, “private data” for a firm’s operations are kept within its own four walls.
It would drive the kind of efficiencies in large interdependent ecosystems which are hard to imagine in the current scenario where several data islands are working with different system languages and it takes a lot of effort to cross link and exchange information. There have been interesting examples emerging across several industries, and below are three notable examples from the trade and logistics sector:
(1) Ocean freight platforms
Ocean freight platforms focused on simplifying, automating, and significantly enhancing the speed and efficiency of the logistics industry are projected to enhance global trade by 5 to 10 percent. Promising to save millions for ocean freight by tracking and exchanging documents on blockchain powered platforms, the new solutions are expected to reduce the need for data entry by up to 80percent.
Blockchain technology is not a quick-win and “low-hanging” fruit given that it involves multiple stakeholders and requires the definition of common ground rules
(2) Trade finance platform
Open trade finance platform Trade IX aims to reduce frictions and operating costs for large organizations and their trading partners, and it has won the attention of several banks and insurance companies. With transactions in different currencies and local jurisdictions that require different contract terms and payments, using blockchain-based trade finance platform can significantly reduce operations and compliance costs while improving speed and efficiency of transactions. DHL is one of Trade IX’s partners, and sees extended credit terms availability as one of the other benefits for our customers.
(3) Supply chain platforms
Possibly the most promising use cases of blockchain technology for consumers are in the area of supply chain for food and pharmaceuticals. Examples like BlocRice, a rice tracker in Cambodia launched by Oxfam charity, give farmers a fairer deal through its digital three-way contract arrangement between primary producers, Cambodian rice exporters and retailers in Europe. The increased transparency and traceability improves farmers’ livelihoods and their supply conditions. This use case applies to several trading businesses which connect farmers and commodities to buyers across the world. In the pharmaceutical industry, DHL is looking at how blockchain could enable “serialization” of the medicines and protect product integrity through all steps of the supply chain through to the pharmacy and consumer, to curb the proliferation of counterfeit medicines.
Forward-thinking for true innovation
As such, corporates should consider exploring the potential of blockchain technology for their industry. Here are some practical tips in taking the first steps to implement it:
1. Think big but start small. As with all innovation projects, identify immediate applicability use cases with current processes and business models before considering the bigger transformational value of the technology in your industry.
2. Go beyond your company’s four walls. Identify a few immediate partners where you have strong influence, jointly discuss the technology’s potential, and define a use case where all involved will see value.
3. Co-exist with current systems. Don’t make this a decision between using existing enterprise system versus new and untested blockchain technology. In this comparison, blockchain stands no chance. It is possible to establish gateway between existing enterprise systems and blockchain with no impact on current systems. You could discuss this with your IT services provider or any blockchain start-up within your industry.
It is clear that blockchain technology is not a quick-win and “low-hanging” fruit given that it involves multiple stakeholders and requires the definition of common ground rules. The question really is if and how long one can wait while these new and potentially disruptive models start to emerge. Bridging the gap between its potential and practical uses will take time. As business leaders test and experiment with the technology, however, they will gain a clearer picture of just how blockchain might help in addressing their specific industry challenges and removing barriers to trust between organizations. And the more they share and cross-pollinate the results with one another, the faster those benefits will be felt across the entire business community.Check Out : Top Blockchain Startups