A consortium – comprising AB InBev, Accenture, APL and Kuehne + Nagel plus a European customs organisation – has successfully tested a blockchain solution. This demonstrated it is possible to eliminate the need for printed shipping documents and, in so doing, save the freight and logistics industry hundreds of millions of dollars annually.
The consortium’s solution showed how documents need no longer be exchanged physically or digitally. Instead the participants share relevant data. That data exists because of blockchain technology and has single ownership principles determined by the type of information. Through a detailed comparison with current documentation processes, the group was able to re-allocate information ownership, accountability and risk.
Martin Kolbe, Chief Information Officer of Kuehne + Nagel International AG, said, “As part of Kuehne + Nagel’s digitalisation strategy, we explore innovative technologies to create benefits for our customers. Blockchain is one of the most promising technologies in logistics. It has the potential to digitalise many of today’s paper-based processes and overcome the multitude of different interfaces. From our perspective, the open and collaborative approach applied in this project is key to gaining traction in the industry and the required market acceptance.”
The supply chain/logistics problem
Any international shipment of goods – for example, for companies involved in the automotive, retail or consumer goods industries – typically requires more than 20 different documents. Even today many (if not most) of these are often paper-based. Enterprises need these to enable the goods to move from exporter to importer.
Across these documents, up to 70% data involves duplication or replication. Yet such a document heavy approach limits data quality. In addition, there is modest real-time visibility to the parties involved in the trade. All this can also delay the financial settlement after delivery of goods.
Supply chains/logistics with blockchain
The solution identified by AB InBev, Accenture, APL, Kuehne + Nagel and their European customs partner can speed up the entire flow of transport documents which:
- reduces the requirement for data entry by up to 80%
- simplifies data amendments across the shipping process
- streamlines the checks required for cargo
- reduces the burden and risk of penalties associated with customs compliance (which levy on customers).
Blockchain, because it is a new type of distributed database system, maintains and records data in ways that permit multiple stakeholders to share access to the same information.
According to Adriana Diener-Veinott, who leads Accenture’s Freight & Logistics industry practice: “Our trials have proven the viability of a shipping process in which many documents can be replaced by secure and distributed data sharing with clear and defined ownership. This gives companies a significant opportunity to save time and money while improving their service to customers.”
The AB InBev, Accenture, APL and Kuehne + Nagel consortium
The consortium, which represents typical stakeholders across an international shipment, collaborated to test twelve real shipments – with various destinations, each with different regulatory requirements. Testing confirmed that blockchain adoption can reduce operating costs and increase supply chain visibility.
Each organisation involved in the trials typified a particular stakeholder in the shipping process:
- AB InBev represented a typical exporter
- APL contributed its role as a shipping organisation
- Kuehne + Nagel provided direction on the requirements for a freight forwarder
- the European customs organisation replicated the regulatory requirements that cargo faces
- Accenture provided the technological and consulting expertise on the blockchain technology and developed the technical architecture required to support a blockchain solution (leveraging its Singapore Internet of Things practice to build the prototype).
Eddie Ng, head of Strategic Liner Management at APL said: “As a facilitator of global trade and strong advocate of innovation, APL sees much potential in blockchain technology to accelerate the digital transformation of the container shipping industry, moving us from traditional paper-based transactions to more efficient, more secure and faster processes along the entire supply chain. We are therefore happy to be part of the exciting journey to explore how disruptive technology like blockchain can benefit our industry, and ultimately our shippers and their customers.”
“We continually evaluate new technologies and innovations to enhance our operations to meet consumer needs and deliver the freshest beer,” said Danillo Figueiredo, VP of International Logistics, AB InBev. “Blockchain technology will be transformational to our business and the world. It reduces mistakes, digitises information and improves the supply chain process so we can focus on our core business of brewing the best beers for consumers.”
What does it mean
Blockchain technology sits poised to reorient operations across a multitude of sectors, such as financial services, government, healthcare and entertainment. As AB InBev, Accenture, APL and Kuehne + Nagel show, there is intense interest from enterprises involved in freight, logistics, supply chain and trade finance.
Prima facie the broad range of participating parties have proven that blockchain can work, and reduce time and costs, when applied to freight, logistics, supply chain and customs. But a sample of twelve is meaningful only in a conceptual sense.
For credulity to take hold, such testing needs to involve tens of thousands of deliveries and transaction. In addition it is unclear whether the blockchain approach used is an open one or a closed permissioned one. This matters for either performance (if open) or the ability of others to join in (if closed and permissioned). The trade-offs become ever more complex in the shadow environment before enterprises commit to blockchain.
