TORONTO, Ont. — Dave Cox, president of Polaris Transport, is willing to completely rewrite the business.
“My mind is open to changing it all,” he told Truck News in an interview about blockchain technology, and its potential to comprehensively change the transportation business. “We have to get goods and services to market, whatever that looks like, but I’m prepared to rewrite the service operating model if the blockchain technology and the robotics tell me I should.”
To say Cox is a believer in technology – and specifically blockchain – is an understatement. He’s fascinated in blockchain technology, though he downplays his expertise. “I’m a hack at this,” he acknowledged. However, Cox takes pride in Polaris’ use of technology and sees blockchain as the next big opportunity.
“We have made a large investment in technology,” said Cox. “At Polaris, we have people here that have the same interest I have in utilizing the technology. The thing I like about blockchain is, it makes a small person relevant. It makes a small company relevant because it’s a very decentralized environment. Essentially it’s a digital accounting ledger.”
Blockchain was born from the rise of Bitcoin in the late 2000s. In simple terms, it’s a decentralized digital ledger. In the book Blockchain Revolution, authors Don and Alex Tapscott explained it this way: “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions, but virtually everything of value.”
“It’s a public ledger, where transactions are recorded and confirmed anonymously,” explained Justin Bailie, president and co-founder of Canadian technology firm RoseRocket. “It’s a record of events, shared between multiple parties, and most importantly, once information is entered it can’t be altered because the blockchain is permanent.”
He anticipates seeing more discussion around the subject of blockchain in the trucking industry going forward.
“Now that electronic logging devices are done, I feel this is the next talking point,” he said. “I think this will be the next hot topic: should trucking companies be strategizing around blockchain?”
Craig Fuller, managing director of the Blockchain in Transportation Alliance (BiTA), says the technology has many real-world use cases in trucking. Among these, he lists: freight tracking; payments; cross-border goods movements; and driver identification.
Because the blockchain is a decentralized digital ledger that can’t be hacked, and is always accurate, it has the potential to eliminate business disputes. Fuller gives the example of lending someone $100, but one party inserts $100 into a spreadsheet and the other mistakenly enters $1,000 into their own. When it comes time to pay back the loan, a dispute ensues. This happens every day in the business world.
“That’s how business works today – companies get into constant disagreements about what the actual truth is,” he explained. “When I was in the freight business, I had a $180,000 write-off because the customer service rep forgot to get confirmation fees on these spot loads. I ended up having to write off $180,000 over it because he failed to follow a very minute and significant process. That’s the world we live in, where there’s constantly these disagreements and no way – except through arbitration and forensics – to actually recreate the events that took place. With blockchain, if it’s properly implemented, it will give you a complete forensics record of that element.”
Cox sees the technology as a way to improve on traditional business processes in the trucking industry, and to better compete with larger competitors.
“Blockchain allows us to scale up and scale down as we see fit,” he explained. “Say we were part of a blockchain that involves multiple shippers, other carriers, Customs bodies. Information within this group moves at lightspeed, whereas today we are reactive. We’re waiting for shippers to tender us loads.”
Blockchain technology would allow carriers such as Polaris, to know when loads from a customer will be ready for shipment in real-time, Cox said.
“If we have knowledge ahead of time where we need to put equipment, that’s powerful,” he added. “I see power with this decentralized nature. You have less reliance on traditional banking relationships. This is what I mean by, it makes the small guy relevant. It allows everyone to scale properly.”
Payments can be made as soon as a load is delivered, improving cash flow and eliminating the need for invoice factoring, Fuller said.
“Any of the intermediaries in the space” will be affected, Bailie agreed.
Cox can barely contain his excitement over the potential benefits of blockchain. He envisions being able to invite customers into blockchains Polaris belongs to and vice versa. But how would it work in practice? Fuller explained that third-party technology companies will likely build the blockchains that businesses become members of – trucking companies are not likely to create them on their own. The process of managing the blockchain will be transparent and invisible to the end user, who will likely enjoy the benefits and manage their participation using a user-friendly app.
“To you and I, when we see a blockchain transaction, to us it looks exactly like every other piece of software we’ve ever seen,” he explained. “In other words, we’re looking at an app that is constructed to present information to us. We don’t know, nor need to know, that a blockchain transaction has taken place. It’s just invisible.
The magic is how that technology works in the back end. So, what you’ll see is these incumbent technology companies that will start to develop technology applications that use the blockchain framework.”
Bailie agreed. “I don’t think trucking companies are going to be doing this on-site. Like a lot of newer technologies coming down the pike, it’s going to require some commoditization from some of the technology players out there.”
It will likely be several years before the technology becomes mainstream, Fuller acknowledged, but when it does, it will be ubiquitous.
“In the next five years, we’re going to have blockchain applications and we’re not even going to think about the fact that it’s blockchain,” Fuller said. “It’s just going to exist and we’re going to take it for granted. Everything that we do and experience in the world is going to be blockchain-enabled and we’re not actually going to know or care that it exists.”
While it sounds like a technology that will come to those who wait, in one form or another, Cox feels it’s important to prepare for its arrival today – even though shippers aren’t yet asking about blockchain.
“I’ve had no one ask me about blockchain outside of the tech world,” he admitted. “But I think we have to be very careful. I think people will try to take blockchain and apply it to today’s business model and today’s problems. I don’t think you can look at blockchain that way. I think you have to look at it as this new technology and how it changes your world.”
That’s why Cox is prepared to completely abandon traditional business practices and processes, if blockchain offers better alternatives. But he won’t be diving in blind, he added.
“We’re going to do it right,” he emphasized. “I want to do it quickly, but we’re going to make sure that the quality is there. There’s a lot more discovery work that needs to be done before we can put a specific timeline to it.”
What’s a smart contract?
One of the most promising aspects of blockchain in trucking, is the ability to create “smart contracts.” The distributed ledger created by blockchain technology allows the creation of simple contracts that are executed when certain conditions are met.
“In a smart contract, they’ve coded a contract between two parties that has an outcome that basically says ‘If this happens, then this will happen’,” explained Craig Fuller, managing director of the Blockchain in Transport Alliance. “In the case of freight, let’s say it’s payments for loads and we’ve tied detention into it.”
A smart contract could automatically add detention charges to the transaction after a set period of time. Sensors on the truck would record when it arrived to be unloaded and when it was unloaded.
“If the truck was in detention for four hours and there’s a $50 per hour detention charge, that smart contract is going to bill (the shipper) or in the case of an escrow account, pull money out of the escrow and give it to the carrier,” Fuller explained. “Effectively, all a smart contract is, is a contract of agreement between two parties that is coded to have actionable outcomes without the need to go to the courts (in the case of disputes).”
Carriers using smart contracts would no longer have to chase down shippers for detention charges. And, payment would be immediate upon delivery of the load.
This is one of the appeals of blockchain technology to Dave Cox, president of Polaris Transport.
“You have the ability to eliminate traditional third parties – banks, lawyers – because everything is secured on the smart contract,” he explained.
BiTA brings together companies interested in blockchain
For evidence that interest in blockchain is high within the trucking industry, one needs to look no further than the members page of the Blockchain in Transport Alliance (BiTA). The organization, headed by managing director Craig Fuller, brings together trucking providers, shippers, and vendors, who have a common interest in blockchain and how it can improve their businesses.
Dozens of organizations have joined, for various reasons, since it was founded in August 2017. Among them is Polaris Transport, one of Canada’s largest cross-border LTL carriers.
“I like what BiTA is doing, in setting the framework for the standards in transportation,” Cox told Truck News, when asked why he chose to join the organization.
“They’re providing education. This is exciting stuff. I like to be on the ground floor, so we can all learn together, grow together.”
Penske Logistics also joined the group in January, to gain a better understanding of the technology.
“We joined BiTA to take part in better understanding the benefits of blockchain for our customers and to be a part of crafting the standard framework in the development and implementation of blockchain technology,” said Andy Moses, senior vice-president of global products for Penske Logistics.
The company feels its customers operating in the manufacturing, food and beverage, and other industries, will benefit from blockchain technology by: further digitizing and securing supply chain and logistics processes; improving order accuracy; and tracking assets.
Craig Fuller, managing director of BiTA, developed an interest in blockchain around the time Bitcoin gained attention in 2009. Fuller ran a payments company at the time and his family runs U.S. Xpress, one of the largest truckload carriers in the U.S. Like many, he failed to grasp the full potential of Bitcoin. He was offered 36,000 Bitcoins to help develop what would be the first Bitcoin debit card, “and of course I turned it down,” he told Truck News. It would be worth about US$310 million as of this writing.
While Fuller remained skeptical of cryptocurrencies, he developed an interest in its underlying blockchain technology and saw that it could have real-world applications in trucking.
“As I would hear the term blockchain over the years, it became apparent that the technology had other use cases,” Fuller said. “And because of my payments background, and the team I surrounded myself with that came from capital markets and from payments, it was easy for us to then understand how a blockchain could translate into specific use cases in trucking. That was kind of how we got here.”
Membership in BiTA has flourished.
“When we first arrived on the scene, there was certainly a large degree of FOMO (fear of missing out, in crypto-speak),” Fuller said, as to the motivation for joining. “But what’s happened over the last couple months is that people are waking up and seeing how this technology can proliferate.”
BiTA is hosting a two-day conference in Atlanta May 22-23 called Transparency18, where Fuller said at least six companies in the transportation industry will be conducting live blockchain demonstrations.
“So, people are seeing use cases,” he said.
Companies join BiTA for its educational opportunities, and to be a part of the discussion from the early stages, Fuller explained.
“It’s a very inexpensive way to be a part of a technology that can change your business practices,” he said. “If you want to be a part of the dialogue about what the future of freight looks like, it’s an important place to be.”
The board is structured so that trucking companies, technology providers, shippers and brokers all have equal say.
“The reason that’s important is, the future of transportation is not going to be done just by people who own trucks,” said Fuller.
Details of the conference can be found at www.Transparency18.com, and the BiTA website at www.bita.studio.