Q&A: CargoX COO sees TradeLens’ failure as learning opportunity

To answer those questions, FreightWaves spoke with CargoX Chief Operating Officer Peter Kern. CargoX in March expanded its relationship with the Egyptian government to provide its blockchain technology to standardize the country’s customs facilitation platform, the National Single Window for Freight Trade Facilitation (NAFEZA).

In the interview, Kern described the difficulties of standardizing blockchain procedures, what global communities have helped create the standards the company has applied to NAFEZA and what skeptics of global shipping standards should know about the industry’s tech-driven future.

Questions and answers were edited for clarity and length.

FREIGHTWAVES: What was your initial reaction when you heard about the launch of TradeLens in 2018?

KERN: I wanted to compliment their effort. I mean, bringing together such a complex and diversified industry, with so much siloed data, into one single ecosystem is a very bold approach. 

We did have some questions around data management and compliance and whether blockchain is a solution for this kind of network. We also had some concerns about having one of the strong industry players running a platform and claiming it to be completely neutral.

FREIGHTWAVES: From your perspective, why did TradeLens fail to make a viable platform?

KERN: Personally, failure is part of this industry’s revolution. We are human beings, we privately fail and companies fail and we learn from it and make things better. It’s difficult to comment on what exactly led to the collapse of the project. They were struggling with getting enough collaboration on the platform in regards to other carriers and entities sharing data.

FREIGHTWAVES: Your company is also working with governments, carriers and logistics companies to standardize digital trade document transfers using blockchain as well. How has your approach to standardizing these practices differed from TradeLens’ execution?

KERN: We believe in the decentralized storage of data because we believe there is no single authority who should be able to intervene with this data. We are also laser focused on our approach. We are not trying to fix all the pain points in the industry. We have a modular approach. We see a pain point, we address it, we scale its solution and then we move on to another functionality of global trade.

We started with the bill of lading, then we added advanced cargo information and now we are working on trade facilitation elements. We are building a data pool with features around how to manage the process paperless, using data standards put in place by the [United Nations], the standards for the BOLs and standards from the World Customs Organization for the advanced cargo information.

FREIGHTWAVES: To build a solution to improve global shipping operations, it sounds like digital players will need to team up with neutral organizations that are already working on setting global shipping standards.

KERN: Yes, and we are starting to invest quite a lot of time and resources in being part of the working groups that are setting those standards. We are a part of the Digital Container Shipping Association (DCSA) working on the standards around BOLs. We have been cooperating with the United Nations and the World Trade Organization to write white papers around these digital transformations. It is very important that tech companies collaborate in the standard-setting process because the standards need to be technologically adoptable and later enforceable.

Related: Q&A: Standardizing supply chain data exchange for ocean transport

FREIGHTWAVES: What are the biggest hurdles to overcome when setting these standards?

KERN: Trust is a major element. That is why we are sticking to public blockchain and decentralized data storage facilities heavily encrypted using decryption keys. CargoX does this so that no single authority collects, uses or misuses the data.

Also, so far, we have not found an industry consensus on what’s best for everyone moving forward. Everyone is building different nodes in different locations controlled by different entities that want to protect their own data. Data protection in international and cross-border trade is very tricky. 

Lastly, blockchain is a complex technology. You need to use a very complex technology with all the technical specifications like encryption, cybersecurity, data protection, but the front end needs a great user experience. For a normal user, it needs to be a seamless process to join the network.

FREIGHTWAVES: If someone was skeptical about CargoX or anyone with your same standardization goals of being focused on their own ambitions instead of creating standards that work for all global shipping participants, what would your response be?

KERN: With our expertise, it’s important that we are in the front seat and that our opinion is adopted by standard setting bodies. Rightfully, I must also compliment those who have got us all here — the International Chamber of Commerce, the World Trade Organization, DCSA, the European Commission and the World Customs Organization. They are very inclusive.

My message to those skeptics is: Don’t be a bystander in the standard-setting process because it is quite democratic. You can influence and you can make your own comments and that is more than we hoped for just three years ago. 

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