How blockchain could create the 'autonomous container'

back end of blue and red cargo containers stacked

February 26, 2018 - Indeed, the very notion of applications that “talk” to one another is merely an extension of a system that shippers and carriers have deployed for years, albeit in a more primitive fashion.

There’s nothing new, for example, about a carrier’s ability to monitor the interior temperature and humidity of a shipping container while in transit. But the coming of the Internet of Things has allowed for the execution of that task with far greater scale, efficiency and accuracy than ever before.

The technology has proved to be of particular value in in the pharmaceutical industry, where the slightest deviation in temperature can ruin an expensive shipment of drugs.

Swiss-based Smart Containers Group, which designs temperature-controlled containers for pharma shippers, among others, collects more than 1.2 billion data points about the supply chain, according to chief executive officer Richard Ettl. The technology features chips that monitor temperature and humidity within a 500-meter range of an air-freight container. In addition to keeping tabs on product quality, the information can be used to make decisions about where to route a container so as to minimize transit time and potential product damage.

Now, Smart Containers is combining the IoT with an even more recent innovation in information technology: the blockchain. Invented to record transactions involving Bitcoin and other cryptocurrencies, blockchain’s ability to create a distributed ledger of transactions makes it a natural for purposes of container tracking and monitoring.

For more information on how BDP Smart® has been ahead of the blockchain trend, click here to read a commentary on the BDP Blog.

Still, there are problems to be overcome. The recording of transactions on the blockchain is a slow and expensive process. Ettl says that drawback can be addressed through the use of Hyperledger, an open-sourced collaborative effort to develop blockchain technologies across industries. Yet another possible workaround is the blockchain platform known as Corda, developed by R3 for financial markets but adaptable for logistics.

Where there’s a blockchain, a cryptocurrency can’t be far behind. Smart Containers is preparing an initial coin offering (ICO) to support its use of blockchain for air-freight container monitoring. It’s also accepting payment in Bitcoin and Ether. The advantage of a cryptocurrency over traditional cash for equipment leasing is that it avoids banking fees while allowing for the automation of payment administration, Ettl says.

Ettl isn’t worried about falling victim to the extreme fluctuation of value that currently characterizes Bitcoin and other types of digital cash. Smart Containers is only exposed to the resulting risk for the few minutes that it takes to process a payment, he says.

The company has been running trials of the blockchain technology with one of its airline partners. The goal, says Ettl, is to create a record of information that follows the entire lifecycle of a container. The data could be made available to shippers, airlines, freight forwarders and customs brokers, all sharing an accurate and immutable ledger of activity.

Smart Containers is now forming a second division to design and monitor air containers of food products. Because food shipments seldom encounter customs delays, the technology doesn’t need to run as long as that which supports pharma items, Ettl says.

Due to its cost, the use of IoT monitoring and blockchain technology seems best suited to high-value shipments. Beyond pharma, ideal products include sophisticated electronics, chocolate from Switzerland, fresh salmon and berries. The denser the load, the more economically viable the equipment, says Ettl. “With scale, we can lower the cost.”

He also sees a future for blockchain-based monitoring outside the world of air freight. Regional distribution networks, involving the delivery of perishable goods to homes, are an area of particular promise. So are packages such as mail-order steaks, which are weighted down by dry ice or other materials required to keep them cool.

One can imagine a world in which blockchain becomes an indispensable part of tracking and monitoring all types of containers, via multiple modes of transportation. (The future of accompanying cryptocurrencies, on the other hand, is far less assured.)

“Our vision is of the autonomous container,” says Ettl. “It knows where it’s located, that it has all shipping documents attached in virtual form on the blockchain, and when it runs into trouble can call for help.”

The development of autonomous shipping equipment is likely to track that of self-driving vehicles, as the need for human involvement in transportation gradually diminishes. Ettl envisions steady improvement in the technology in the coming years. “It’s not impossible,” he says, that in three years we’ll be 89-percent there.”

Source: Supply Chain Brain

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