The Swiss freight forwarder says using the blockchain-backed electronic bill of lading will give it a leg up on the competition.
Fracht AG, a Basel, Switzerland-based global freight forwarder, is teaming up with CargoX, a startup that offers a blockchain-backed “smart” bill of lading.
Under the partnership, Fracht will test the CargoX Smart B/L with its shipper customers in order to determine the long-term functionality of what CargoX calls the “first fully digital, paperless and secure original bill of lading solution on Earth.”
Arguably the most important document in shipping, a bill of lading confers proof of ownership of freight as it passes through the various stages in the supply chain, from the exporter to the transportation provider and the transportation provider to the importer.
Traditionally, a paper version of the bill of lading for a given shipment is printed by a carrier or forwarder and sent to the original exporter via express courier services once the transportation provider takes possession of the cargo. Once the seller receives payment for the goods, it sends the document to the buyer, and then the buyer sends it back to the carrier or forwarder in order to take ownership of the cargo.
According to CargoX CEO Stefan Kukman, this process can take up to 10 days and costs roughly $100 on average, even in the best-case scenario. And if an original bill of lading is misplaced in transit, it can take weeks for a new one to be issued and sent, potentially resulting in cargo delays and additional associated costs.
The CargoX Smart B/L platform lets companies issue and handle original bills of lading in a digital format on the Ethereum blockchain network, facilitating the transfer of the ownership of the documents without the need for paper or courier services to transport them. And because the bill of lading is housed in an encrypted blockchain environment, it cannot be altered or stolen by outside parties and is stored in perpetuity inside the system, where it can easily be accessed for future reference.
“With the introduction of the CargoX Smart B/L, Fracht AG will harvest the benefits of a modern blockchain-based solution: ultimate reliability, safety and much higher speed of transfer of documents between process partakers, as opposed with the current, paper-based transfer,” the companies said in joint a statement.
CargoX has yet to set a date for the full launch of the digital bill of lading on the open market, but Kukman told American Shipper the platform is production ready and Fracht and other parters have already begun testing it under real-world conditions. He added that CargoX’s digital bills of lading will cost just a few dollars each, as opposed to hundreds for the traditional paper version, and pricing ultimately will be based on volume, with substantial discounts for customers purchasing larger numbers of Smart B/Ls.
Kukman said CargoX does not charge its partners, which can use up to 1,000 Smart B/Ls for free and have the added benefit of testing the platform prior to it becoming available commercially.
“Partnerships for us carry a big value, as our partners help us get even better insight into the processes that take place in logistics and shipping,” he said. “We believe that the result of the partnership is not just the 1,000 B/Ls which we provide to our respected partners, but a broad cooperation and mutual support in developing new approaches in adding value in the most global business in the world — logistics.”
Ruedi Reisdorf, CEO and owner of Fracht, which focuses primarily on delivering tailor-made logistics solutions that give their customers quantifiable added value, said that as a service provider, his company must be able to “step into our customers’ shoes and impartially choose the best available options” when it comes to technology.
“We have made various tests on the use of blockchain in shipping and forwarding and the bill of lading is exceptionally suited, being a document of value that exchanges hands and needs to be secure,” he said, adding that offering innovative services like a digital bill of lading is one of the many ways Fracht can differentiate itself from the competition in a crowded market.
“Fracht is one of the companies we look up to, as they prove that change is the only constant in business,” said Kukman. “They are always looking at how to adapt to business, where to find new opportunities and how to always keep in mind the global common good. It is very similar to the idea how we designed our solution — by looking at the whole picture and anticipating what the future will bring! Not just profits, but optimal workflows, new technologies and a multitude of benefits, from speedier and safer document ownership transfer to optimized financial flow.”
Reisdorf said it’s still far too early to tell if the use of blockchain technology in shipping and logistics will be more than just “a footnote in history,” but added Fracht has always believed that the digitization of information had the potential to revolutionize communication and documentation in the industry.
“We are by far not the only ones that have come to the same conclusion,” he said. “And now we teamed up with, in our opinion, the best startup, the one that will bring in blockchain in shipping and in the bill of lading — it is called CargoX.”
Fracht pilots CargoX Smart B/L
