News & Analysis

IATA on blockchain

IATA’s Head, Digital Cargo, Henk Mulder assesses blockchain’s influence on the global supply chain

How can blockchain help transform the air freight industry?

The short answer would be, perhaps a little. Blockchain has been hailed as a tool for transforming business in general on the basis that it represents the “internet of value” as opposed to the ‘information’.

However, as businesses experiment with blockchain they are learning that we already have good tools for managing value (money, goods, IP, etc) and that blockchain as a new technology creates opportunities for new business models beyond our current business. This includes crypto-currencies and smart contracts, which have their role in finance and legal agreements.

Regarding transforming airfreight, it depends on which part of airfreight we are talking about. The ‘problem’ with airfreight today is not that we lack efficient technologies but that airfreight is only part of a highly fragmented and complex global supply chain.

Blockchain alone will not lead to integration or simplification of the global supply chain or airfreight. Other ‘forces’ may do that but it won’t be driven by blockchain.

How will blockchain help create the paperless, transparent system that gives everyone who needs it visibility?

Although blockchain IT suppliers would like us to believe that blockchain will drive paperless business, there is nothing in their value proposition that deals with the fundamental lack of common process, standards and systems-integration in the supply chain that might support it.

The well publicised efforts of IBM and Maersk to produce paperless business on a blockchain is focused on the Bill of Lading and other freight documents are being added. However, importantly, there are only a handful of big maritime shipping lines in the world and given the scale of Maersk’s operations they can set standards for the maritime world and impose a blockchain – or any other technology – if it wants.

IBM is working to replicate this in airfreight but so far these are inconclusive market tests.

How do we separate the genuine opportunities for blockchain from the buzzword ‘next big thing’ ideas?

I would ask three questions:

– What does your blockchain solution solve that we can’t already do?
– What is it in your solution that will allow you to scale up its usage by customers?
– You won’t be the only blockchain in town. How will you link up with the other blockchains in such a way that it all works as if it is one blockchain?

I am sceptical when it comes to blockchain proposals where the focus of the solution is not on solving a problem but on growing a crypto currency.

With so many companies working on blockchain projects, how do we work towards a standard for the whole industry?

It is not about standards – we already have data standards which do not depend on the type of system used. Perhaps the question is: which blockchain should be used? Only the market can answer this question. From a technology perspective it doesn’t matter which blockchain it is. We can always move to a new blockchain once we know which is the winner.

What does the ideal transparent, end-to-end, shipment journey look like?

Easy. Any party in the supply and transport chain can have full visibility and transparency of the information that they need to fulfil their role.