Kuehne + Nagel, one of the world’s leading logistics companies, announced on 10 September that it has used blockchain technology by incorporating it into its well-established verified gross mass (VGM) portal.
With about 800,000 transactions a month recorded on the portal, there needed to be a better way for shippers to record the VGM of each shipment on a platform that can handle that many transactions securely and in real-time.
This will also do away with tedious paperwork and time-consuming manual processes, so blockchain was the key, said Jens Drewes, Kuehne + Nagel’s President of South Asia Pacific. He was a keynote speaker at the second day of TechInnovation 2018.
All information submitted via the portal is stored on-chain. This allows for all data exchange with third parties to take place on the native blockchain interface. It also removes the need for additional communication channels outside of the chain.
Blockchain’s hallmarks of security, immutability and traceability also complement industry requirements of confidentiality and data privacy, said Kuehne + Nagel in a press release.
VGM is an important aspect of the transhipment process. Customs officials rarely open up shipping containers for inspection, so shippers need to ensure the gross mass is accurate and matching the description of the declared goods in order to pass checks.
“Wrong declaration of weight is a potential threat to authorities and the shipping community resulting in overweight containers and frequent incidents. Only a few containers will be opened and measured,” explained Drewes. “VGM must be reported for every container before it is cleared to go on-board so everything corresponds through the verified gross mass system. The portal helps particularly small and medium-sized shippers verify the information, which is then transmitted through our systems and passed on to the relevant authorities,” he said.
Kuehne + Nagel’s move to incorporate blockchain is testament to the company’s wholehearted embrace of new technologies as well as open collaboration. As the market leaders in seafreight logistics, Kuehne + Nagel’s logistics experts handle more than 4.3m TEU in over 100 countries from sectors such as Aerospace, Pharma to Retail as well as specialized industries such as Food Services.
Kuehne + Nagel is partnering with government institutions, universities, startups, and others who are able to build proof of concept, to translate new technological developments into real life approaches, said Drewes.
Implementing new tech must be a top-down affair
“The global logistics network is evolving faster than ever before,” said Drewes. “The line between business-to-business and business-to-consumer is blurring. There is growing demand for same-day deliveries and seamlessness in the consumer experience,” he said.
Drewes has been based in the region for two decades in his tenure at Kuehne + Nagel. He has witnessed first-hand the dramatic shift the logistics industry in Asia is experiencing, and the urgent need for players to find novel ways to meet increasingly complex consumer demands.
“When you look into logistics in Asia over the last 10 years, demand for goods for export to Europe and the US has given way to domestic demand. China, Indonesia and India have a total population of 3 billion – about 40% of the world’s population. And with a fast-growing middle-class, the demand for consumer-centric logistics will drive the industry for years to come,” said Drewes.
But with any large-scale company, implementation of new technologies throughout the organisation will present significant challenges.
“The drive for innovation has to come from board members, leading by example, and advocating and encouraging innovation in the organisation. Diversify and speak to companies outside of your network and be willing to share data. The mindset change will take some time,” he continued.
And Kuehne + Nagel is more than 125 years old, he noted. For a company with such a long and successful legacy, the drive for innovation started at the very top and Drewes believes that this approach is crucial for any organisation looking to innovate.