This Week in Logistics News (January 14-18, 2019)

By Adrian Gonzalez

Will blockchain have the same fate as RFID in supply chain management? Meaning, will its hype far exceed what it will ever accomplish in the industry?

My friend Matthew Harding from Chainalytics raised that question on LinkedIn this morning by posting the following chart from Google Trends (which I modified to include “RFID” and “artificial intelligence” for comparison):

No doubt, as I wrote last March in Blockchain Will Solve, Save, Cure Everything, blockchain has been severely over-hyped, with articles claiming it will solve hunger, the environment, free speech, and even save humanity. It appears, however, that this “next new shiny thing” has lost a bit of its blinding sparkle, including among investors. As reported by The Loadstar this week, “Blockchain logistics start-up OpenPort has notified shareholders it is out of funds and intends to proceed with liquidation.” Here are more details from the article:

In an email sent to shareholders last week and seen by The Loadstar, founder and chief executive Max Ward said the Hong Kong-based company had failed to raise enough capital to continue trading.
He wrote: “After innumerable failed attempts to raise capital through investors, existing shareholders, asset sales, and the contemplated reverse takeover of the Canadian listed shell, OpenPort is out of funds and cannot continue its operations. The only remaining and responsible course of action is to proceed to liquidation.

Yes, this is just a single data point, and maybe OpenPort didn’t deserve to receive additional funding, but the company’s failure to secure more money suggests that investors are perhaps starting to take a more conservative and rational approach to blockchain investments moving forward.

That said, leading companies are still testing blockchain in various supply chain applications. This week, for example, Elemica (a Talking Logistics sponsor) announced “the completion of a successful blockchain pilot project between leading global chemical manufacturers as part of an innovation initiative testing new technologies that will redefine B2B processes and support digital transformation.” According to the press release:

In the pilot program, Elemica and crossinx, a network for financial business collaboration solution, exist as nodes on a public blockchain, connecting structured data with unstructured data, such as documents, to enable multi-tier payment. In the pilot, two large global chemical companies facilitate document and data transfer of invoices, purchase orders, delivery tenders and proof-of-delivery posts. With the ability to connect to a digital network, blockchain functionality can be made accessible to support a many-to-many connection of companies, facilitating payment processing.

Also this week, as reported by Reuters, “Ford, technology giant IBM, South Korean cathode maker LG Chem and China’s Huayou Cobalt have joined forces in the first blockchain project to monitor cobalt supplies from Democratic Republic of Congo.”

As I wrote back in December 2015, I believe blockchain has the potential to improve supply chain processes. But just like you wouldn’t use a sledge hammer to drive a screw into a wall, blockchain is not necessarily the best, most cost-efficient, or most scalable solution for all supply chain processes and transactions. Where it makes the most sense, at least today, is where you’re seeing the initial pilot tests: for financial settlement, customs compliance, and industries such as Food and Pharmaceuticals where chain of custody assurance is most critical or where regulations almost require it.

What do you think? Will blockchain’s hype far exceed what it will ever accomplish in the industry? Post a comment and share your perspective.

In the meantime, here’s the rest of this week’s supply chain and logistics news that caught my attention:

Brexit: The Uncertainty Continues

There’s still no deal with regards to how the U.K. will leave the European Union. As reported by The Guardian this morning, “Theresa May will hold meetings with members of her cabinet in Downing Street to try to forge a route through the Brexit impasse, as one of her ministers suggested her withdrawal agreement could be improved if the UK was prepared properly to leave with no deal.”

France and other EU countries are starting to prepare for a “no deal” exit. According to the BBC, “After the UK Parliament rejected the withdrawal agreement [this past Tuesday], [French Prime Minister Edouard Philippe] said laws had to be passed and millions invested in French ports and airports. An EU official will now visit all 27 capitals to coordinate no-deal plans. EU countries with close UK ties have already begun preparing for its departure on 29 March without a deal.”

France, for example, plans to invest around €50m ($57m) “in ports and airports, focusing on control points and parking areas, with the possible appointment of 580 customs and veterinary staff.”

Businesses are also starting to prepare, especially companies in the pharmaceutical industry, where delays in drug shipments can threaten patient safety. “Bracing for a chaotic Brexit, the world’s biggest maker of insulin has reserved space on airplanes and plans to boost stockpiles further to ensure diabetes patients in the U.K. don’t run out of the life-saving medicine,” reports Bloomberg. Here are some more excerpts from the article:

Novo Nordisk A/S, the Danish drugmaker, booked some air-freight slots to prepare for the possibility of significant border delays, Pinder Sahota, its U.K. general manager, said in an interview. The company also is aiming to increase stockpiles of insulin to as much as 18 weeks by the end of March, from seven weeks typically.
Novo’s Paris-based rival Sanofi is also augmenting its U.K. supplies to about 16 weeks on average and testing two alternative routes into the country […] Most of Novo’s products rely on cold storage and must be kept carefully within a certain temperature range, compounding the challenge. Bayer AG of Germany said it faces similar stockpiling constraints, especially for medicines like the prostate cancer drug Xofigo, which contains a radioactive substance.

(As the father of a daughter with type 1 diabetes, I completely appreciate the “life or death” implications of not having insulin available. Let’s hope this mess gets sorted out before a health crisis erupts.)

Finally, this line from the article caught my attention: Novo, which started planning for different Brexit scenarios about three years ago [emphasis mine]…

The company didn’t start planning for different Brexit scenarios this week, or this past month, or even this past year; it has been planning for 3 years! This validates a point I have been making for years when it comes to supply chain risk management: Companies that have already modeled and simulated these risks and scenarios, months or even years ago as part of their ongoing supply chain design and risk management activities, will be able to respond faster and more intelligently to these changes than their competitors.

And with that, have a happy weekend!

Song of the Week: “North Star” by Future Islands