Block Chains

In May 2017, a multibillion dollar company best known for overhauling the taxicab industry, Uber, launched Uber Freight, a project, and an app, designed to have much the same impact on (mostly land-bound, US domestic) freight shipping that Uber’s flagship app has had on ad hoc personal transport.

Since that launch, individuals or companies with freight to ship haven’t had to contact trucking companies. They have the option of simply indicating via a cell phone that they want a cargo shipped, giving the destination and the price they’re ready to pay. Willing truckers have responded. This has not had a huge impact for the largest shippers, who either have their own trucking fleets or have long term relationships in existence and little need for such a service. But it has already made a big impact among smaller shippers.

Early in 2018, Uber also announced that it is working on an expansion of the Uber Freight service to international and oceanic routes.

Disintermediation

The most obvious response is that such a use of Uber’s technology would put it in direct competition with the freight forwarders, disintermediating their role. However, in an interview with ShippingWatch, Lior Ron, the head of Uber Freight, said that freight forwarders aren’t the competition. They are potential partners and collaborators with Uber. 

Ron said, “They are very good at focusing on international freight and very good at servicing very complicated logistic needs. So I actually see a great opportunity to partner with the freight forwarders with the on-the-ground trucking operation or we can be a trusted partner with the freight forwarders to provide transparency that their customers need all the way to the destination.” He then acknowledged that as of yet there was no “explicit” partnership between Uber and any freight forwarder, although he stressed that “we are very open.”

This sounds a bit like the conventional “making nice” of a new entrant. One plausible hypothesis at the least, is that although Uber does value the connections and the institutional experience that the freight forwarders have and would be willing to partner with them to access those assets, it sees disintermediation in the near to mid-term future as it acquires those same contacts and experience for itself. The whole history of the internet, after all, has been a record of disintermediations.

Looking beyond that, (or just to the side of that) we can see the distinct possibility that the disintermediators will be disintermediated, that blockchain is already doing to Uber what Uber may be doing to the forwarders.

Blockchains and Ride Hailing

Return to the core Uber service: ride hailing. How would a decentralized blockchain driven system differ from that? It would employ a transparent reputation monitoring system for its drivers, without any centralized vetting, so that the wisdom of the crowd would flag the good drivers (or, for that matter, the good passengers) and edge out the former, retaining the latter. Also, drivers would be in such a system able to keep 100% of the fares that they earned, with the understanding that the required insurance would come out of that total.

Most importantly, in this peer-to-peer framework there would exist no point at which an intermediary comes between a rider and its ride.

The DAV Network, a cryptocurrency fueled effort to create such a network for “decentralized autonomous vehicles,” launched its initial coin offering on April 30, 2018. The founding group, led by CEO Noam Copel, describes its business plan as “a decentralized infrastructure to revolutionize the transportation industry on the blockchain.”  And maritime freight is explicitly included within that broad vision in the DAV white paper.

Chains of Custody

Blockchains aren’t relevant solely to the ride-hailing aspect of the maritime freight industry. For a less ambitious application, consider that blockchain could be set up simply to establish the chain of custody in a container shipment. In such a scenario, title to the freight could transfer digitally once a set of conditions has been met (such as delivery at the destination port), this transfer in turn triggering payment.

However, the revolution is very likely to come. Last year, a scholar in international trade law at the University of Sao Paulo, in Brazil, cautioned customs authority and other national and international regulators that the maritime world surely will see the applications of blockchain technologies at an exponential pace, and that the authorities had best be ready for it.

“Entering talks about the new distributed ledger network now,” writes Renan Mazziotti Pires, “will give access to discussions that can adapt the development of the blockchain model in a way that will be more easily adopted by all the parties involved, either in a plurilateral or hopefully in a multilateral way providing a compass to the future of trade.”

GET THE LATEST STORIES AND TIPS FROM CATERPILLAR – SIGN UP FOR OUR E-NEWSLETTER