Successful carrier management in China depends on available trucks, drivers and credibility. A Blockchain based rating system from DB Schenker and VeChain could lead to a higher transparency, efficiency and consequently better conditions for truck transport in China.

Summary:

The Chinese logistics market is extremely fragmented

Information/ traceable record about the credit of logistics suppliers is insufficient

90 percent of truck transports in China are carried out by subcontractors

Rates of damaged cargo are still very high

Project- and platform partners for Blockchain rating systems are needed

The Chinese logistics market bears great potential – but at the same time also many question marks. In China the vast majority of transports are carried out by logistic subcontractors. In the current market given information about the availability for certain routes, the credibility of the driver or the condition of the carriers are scarce. More over there is no proof that existing data can be trusted and was not modified in the past.

Questions like “How could the whole transport process be made more transparent?” “What makes a carrier reliable?” are addressed in a joint project between DB Schenker and VeChain, a provider for a Blockchain powered software platform.

A Blockchain based carrier management platform fueled by ratings

Together with VeChain we have developed a prototype solution for a carrier management, a supplier evaluation system.

Technically this carrier rating system is aimed at providing centrally available, true and reliable data on drivers of subcontractors based on the following criteria:

A safe platform meeting the criteria mentioned above can solve the problem of insufficient coverage of trustful carriers in China. We have decided to integrate Blockchain technology in our platform model for the following reasons:

“Blockchain can be considered as a trust machine. It is distributed but consistent, open, but encrypted. All information recorded in Blockchain are immutable and traceable.”

What are the 3 reasons this rating system could support efficiency?

Facing the Empty Miles Problem

If there is no knowledge about available carriers a really important bit of information gets lost: the occupancy rate. Especially when talking about far distances in mainland China, a route from Beijing to Shanghai for example, empty miles can become very costly. A platform that is available to different market participants could bridge that gap.

By having access to a joint database, the number of known carriers could increase and of course diversify. Making the available carriers transparent helps to solve the problem of demand and supply in the carrier business across the.

2. Reduced Returns – safer cargo and cargo in excellent condition just in time

Especially in times of counterfeit there is great need to track the origin of transported goods along with the condition of the goods during transportation. Wealthy Chinese have higher demands on imported perishable goods and are more and more time sensitive. Questions like “where is my wine from France”, “in what condition are my cherries from Chile” describe the required new service orientation logistic carriers should follow. A Blockchain based carrier platform can make these information available to the client directly and consequently lead to a better service, less returns.

3. More responsible drivers through tracking and tracing system

What happens when a truck driver becomes more transparent? He will most likely meet the objectives agreed on before. Data might reveal the transport route usually taken is accountable for the damage happened to the cargo. Or it might show that the repeatedly exceeded speed limits caused the damage? Abusive behaviour like this will be registered in the database. Sooner or later a point will be reached when these correlations influence the comprehensive ratings within the carrier management platform.

Remaining Challenges to find potential data-partnerships

Even if the joint project between DB Schenker and VeChain has passed the proof of concept stage already, the critical mass of data can only be reached with business partners that share the same idea of a safe carrier management, willing to contribute.

“The main challenge of bringing Blockchain based projects to life remains to find strong and modern data-partnerships. As for now the readiness to participate in new data sharing models is very low.”

If we want to welcome progress in logistics, we need to change our preservative attitude towards data. For those companies or representatives who worry about the platform implementation and the value of their own data - there are some final thoughts:

The platform will be organized in a consoritum whith shared ownership and responsibility. Luckily this Blockchain based solution is implemented easily and quickly. As for the value of shared data - nothing is carved in stone yet. Among several pricing methods a cost per click model with micropayments in crypto currency appears to be very reasonable.

The benefit would be in any case significant – data-wise, efficiency-wise and of course money-wise.

Has your company thought about transport alliances in China lately?

Do you have any reservations about shareing data Blockchain models?

Would you like to learn more?

Feel free to comment and start a dialogue with me!