Port of Rotterdam is experimenting with blockchain to further its understanding of the technical implications, operational benefits and business value of the technology.

The company has established a blockchain fieldlab that allows all clients, multinational and SME alike, to experiment with the technology to jointly find business efficiencies, making the Port more valuable partner to its clients.

“We believe blockchain technology is a game changer, and not just for the financial industries. It will change other industries such as logistics and energy as well,” Tim de Knegt, treasurer and manager of strategic finance and treasury, Port of Rotterdam tells GTNews.

The blockchain fieldlab was established in early July and is due to go live in September. De Knegt reports interest from governments, financial institutions, technology companies and business alike. “We have had international interest from other ports such as Singapore to Dubai and Los Angeles, clients such as Vopak, BP, Maersk & Shell and technology companies such as Google, Microsoft and IBM,” he says.

Due to the technology being in its infancy, there is a lack of use cases that prove its values for companies looking to implement blockchain. “Treasurers need to find a direct business case for everything they do. But, you won’t necessarily be able to find one for your company,” says de Knegt. The value of blockchain is collaboration, thus you will always have to look at the holistic business case.

“For us, we use blockchain for the companies we work with, we optimise the supply chain and operating margin of our clients and we get more business by facilitating them. Treasurers need to look at what other business models are possible for their companies.

De Knegt uses the example of the traditional supply chain for logistics between China and Germany. Each container may take 40 days to arrive but it will spend more than 40% of that time idle, which is tremendously inefficient.

The companies involved in this logistics process could use blockchain technology to make the process more efficient, cheaper and more reliable, de Knegt proposes.

“If blockchain is used properly it can create tremendous value. You need to look at it from a holistic point of view,” he says.

“Treasury is often seen as being very internally facing. They can add a lot of value to the sales process and create better external relationships with their own clients. I work with some of our largest clients to see how, from a treasury point of view, I can add value to their role and operational processes,” de Knegt continues.

“I think the most important thing to note is that no one is able to get a working proof of concept that is scalable enough to actually get the results they want”

The Port has not yet implemented any blockchain software into the company’s production yet but De Knegt argues that blockchain’s most interesting usage is in logistics due to its many participants in transactions.

“[Logistics] is quite a fragmented industry right now. There are a few players that dominated the market and lots of smaller players. There is more efficiency that could be made in supply chains and from a risk point of view,” he says.

The main benefit of blockchain will not come from using it as a single company, but as a group of companies, de Knegt insists. The benefits can be found in the scalability of the technology.

When the Port approached clients about collaborating with blockchain experimentation, the businesses responded with plenty of enthusiasm.

“Blockchain is not necessarily a starting point for a general treasury. I don’t experiment with it from a treasury point of view but more from a business point of view. I look at physical and virtual transactions. That is where my role differentiates from the traditional treasurer,” explains de Knegt.

“I think the most important thing to note is that no one is able to get a working proof of concept that is scalable enough to actually get the results they want,” he says.

There are also no production solutions yet that have been successfully used by corporates on top of the fabric of blockchain technology, according to de Knegt.

It is not the technology that is currently holding the adoption of blockchain back. There is plenty of innovation surrounding blockchain systems that allows for more flexibility than previous models.

Take, for example, Ardor, a new scalable form of blockchain technology making transactions faster. It is a blockchain-as-a-service platform that bypasses a lot of the common issues when creating a blockchain ecosystem as well as securing it with enough nodes. It uses features such as decentralised phasing, voting, and trading.

However, de Knegt says that while blockchain technology such as Ardor is very promising as a fabric, “we need more systems that make use of the fabric”.

The technology and number of transactions you can do is very important, but de Knegt argues that the key area that needs to be worked on right now is that every party involved in the blockchain solution participates.

An example of this is compliance. In a trade transaction, the Port of Rotterdam might rely on information from others in terms of supply chain compliance, but blockchain technology could actually show that you are compliant, if every component participates.

“General treasury and financial teams are often keen to operate in their own bubble but they could bring more value to their companies with the knowledge that they have”

“Eventually blockchain should be like Microsoft Office – you can use it on a Mac, a PC or Android. You will be able to use the token on any type of computer,” says de Knegt.

“There are lots of small systems that are improving but do not deliver on what they promise. You need to find the right use cases that actually bring value,” he says.

De Knegt is focusing on finding blockchain supply chain use cases and energy sector solutions as these have operational and strategic business benefits rather than just financial, he argues.

“General treasury and financial teams are often keen to operate in their own bubble but they could bring more value to their companies with the knowledge that they have. They should look further than their own bubble. They should optimise systems and processes in the companies and within their own supply chains,” he argues.

When asked what advice would you give to a treasurer looking to experiment with blockchain technology, de Knegt says: “Make sure that you spend enough time looking for the most promising use cases and fully dedicated personnel.”

Hear more from Tim de Knegt on how businesses can implement blockchain and blockchain inventory management by attending the Treasury Leadership Summit in London this December where he is hosting a seminar titled: ‘Blockchain: Building a case for an improved financial system.’