Blockchain initiative 300cubits has created a new type of cryptocurrency to solve liner shipping’s US$23bn “booking shortfall” conundrum.
Named TEU, the de-facto industry currency is distributed as tokens on the Ethereum network and will be tradeable on various global cryptocurrency exchanges.
300cubits claims the tokens will help to eliminate shipping’s “trust issue” by reducing the counterparty default risk, caused by shipper ‘no-shows’, and by carriers ‘rolling’ cargo.
According to New Jersey Institute of Technology’s Professor Michael Erlich, the impact of this booking shortfall can be quantified as 5m teu a year, which costs the industry $23bn when knock-on effects, such as carriers’ lost revenue and shippers’ additional inventory costs, are calculated.
300cubits’ solution is to use TEU tokens as booking deposits. The tokens are coded with a set of immutable conditions to create blockchain-enabled smart contracts to govern the booking transaction.
“Once committed, neither party can alter what has been agreed,” said 300cubits.
“Both the container lines and their customers will be given TEU tokens that will be held as deposits with conditions, and paid out later, upon the execution of the shipment booking.
“The container lines will be compensated with the TEU tokens if the customer does not turn up with cargo. Likewise, the customer will be compensated with the TEU tokens if their cargo is rolled.”
The no-show issue is clearly a pressing one for shipping lines. In June, CMA CGM introduced a $150 per teu cancellation fee for booked services to the Indian Subcontinent, Middle East Gulf and Red Sea ports.
However, according to 300cubits co-founder Johnson Leung, cancellation fees and other penalties can cause further inefficiencies.
“Shipping companies are already putting in a lot of resources and spending millions on this lack of trust issue,” he told The Loadstar....MORE