With the plethora of blockchain startups, it’s not so often that you come across established companies adopting blockchain to improve their processes. But Smart Containers first application, SkyCell, has been renting out their temperature controlled containers for over five years already–to some of the biggest names in food and pharma. So, why move over to blockchain?
When your client list includes the likes of Roche and Novartis, why switch up a model that’s already working? We spoke to the Co-founder and CEO of Smart Containers Richard Ettl about the importance of blockchain in the logistics industry and what problem it’s solving for his company in particular.
Settling International Payments Easily
“About 18 months ago, we started getting into blockchain, and started working about a year ago on leveraging the capabilities of the blockchain. So, our first application was accepting cryptocurrencies so we can automatically settle invoices through Bitcoin and Ether. We started in January and were the first airline container rental company to do that.”
Moreover, in countries with closed economies, like India, it can take up to 6-8 weeks before the company receives payment–and up to $150 disappear in the banking world. “With an Ether payment, we’re talking about seconds–and it’s massively cheaper,” Richard points out.
The possibility of India banning cryptocurrencies shortly may cause a “hindrance in the short term,” but Richard believes that governments will eventually embrace cryptocurrency.
“I think it is about control and that governments are afraid of losing control over their currencies. But in the long term, they will embrace it and even have their own cryptocurrencies. Smart Containers is cryptocurrency agnostic and will adapt to accept whatever cryptocurrency makes sense in the long term.”
Tracking Multiple Items Around the World
Renting out thousands of containers to various companies and countries around the world isn’t easy to track. There are many issues involved in figuring out the whereabouts of a certain container at a given time.
“We noticed the challenges in tracking these assets,” he says, “so we built our own ERP system. The more assets we have, the more of a decentralized problem logistics actually is.”
If you’ve ever lost your suitcase while flying or a package in the mail, you’ll know it’s not easy keeping tabs on millions of items circulating around the world. And when you’re dealing with temperature-sensitive products, the stakes are even higher.
We often hear about blockchain technology being expensive to integrate. Yet in the logistics industry, it’s allowing companies to cut down the costs for their clients of shipping containers all around the world.
“When you ship a pack around the world, this requires about 200 communications of different parties in the supply chain. This is a combination of phone calls, emails, some integrated communication systems. Blockchain is a red string in all that communication. You attach all that information to that blockchain”
And when you have the string attached, you no longer have hundreds of people talking to each other, as all the information is already there on the blockchain.
But has blockchain reduced the amount of personnel that companies need, therefore threatening jobs?
“I think that’s a consequence,” Richard admits, “but in a positive way. Chasing after these shipments is actually not a rewarding job, so I think it will dramatically increase the productivity of the different stakeholders in the supply chain.”
Transparency, Anonymity And Reducing Human Error
Blockchain allows Smart Containers to manage data more efficiently, as well. For example, certain elements need to be public and available to all–if it’s a dangerous good, where it is shipping from and to, etc.. But other data needs to be kept private, like the value of the equipment inside.
“That’s what we’re doing, we’re combining the private and public elements for the logistics industry through blockchain,” Richard says.
They’re also reducing human error. “If you have a person talking to another person in different languages, you have a lot of room for information to be lost in translation. Using blockchain significantly reduces the amount of human error in logistics. Also, the weak points of lots of sensitive information flying around from various sources.”
Getting New Ideas
You may wonder why an established company with proven technology would hold an ICO, particularly with the certain negativity surrounding the term as of late. But the Smart Containers ICO makes sense for a few reasons (besides acquiring more funds).
“The ICO is an image campaign,” Richard explains, “we’re launching a new type of product on the food side, and modernizing our image.” They’re also receiving some key ideas from investors themselves. One of which came from a Norwegian salmon farm currently losing up to 12 percent of product per year.
Another, to reduce the expense of countries with weaker infrastructure and hotter climates that can’t afford to rent cool trucks for moving food around. “They can rent a box now and it’s more affordable,” he says.
Food and pharma are the main focus areas of Smart Containers since these are products that are highly temperature-sensitive. However, there are other possibilities in the future, including organ donor logistics.
“We can transport a living heart,” Richard enthuses, “and we developed a box for the Children’s Hospital in Zurich to transport living skin. That needs to be transported at body temperature 37 degrees (98.6 Fahrenheit). “So, we can transport to hospitals for use for burn victims or people with skin cancer.”
Another possible use case for the future is in Richard’s words “a little morbid.” He says, “Transporting recently deceased bodies is a challenge, so that might be something we could get into… but maybe we would need a new brand for that!”
What Are Some of Smart Containers Successes So Far?
“On the pharma side, today we have the track record of being the safest system on the market. In our industry, that’s measured by the amount of shipment out of 100 that you do not comply with the right temperature and that leads to product loss. Last year, we had less than 0.1 percent temperate deviation and zero loss.”
On the food side, things are just getting started. “We see an up-and-coming trend in the consumer market, direct to consumer, but food has to be extremely cheap to be direct to consumer.” So cheap, in fact, that they’re looking at renting containers out in certain circumstances from just $1 a day.
And the Challenges of Blockchain?
Richard doesn’t really see the technology of blockchain as a challenge itself, but more about how young startup teams will scale their growth internationally.
“I think building a global organization has its challenges and many blockchain projects will have to face these as well. How to lead a global young team, how to keep the corporate culture going on everywhere, even when you have people working remotely for you. Keeping the culture together is important.”
One challenge for Smart Containers, in particular, is also managing roads. “When you see an explosion of demand, planning ahead and getting resources in place ahead of time is a challenge. These are soft skill problems, leading people, finding the right people, adapting to change, managing speed through the lifecycle of the company.”
With a company growth rate spreading faster than a virus– “historically we always doubled every six months. Now we’re talking about factor 19 growth”–just trying to manage that can be overwhelming. And this is happening to other blockchain companies as their ideas take off. So how do you manage these types of problems?
“I would recommend getting a mentor, not someone used to running a startup, someone from a big corporation. They tend to manage existing problems, rather than growing ones, they have management experience.”
“Building up an amazing team and working with it is probably my favorite part of the job,” he says. “Creating something from nothing is the most rewarding for me. We started out as an idea, now we ship to 81 countries in the world, I have the privilege to travel to many countries per year, it’s a really rewarding experience.”
When asked about the future of blockchain, Richard comments, “This is still a young industry and we should expect to see a lot of change. The projects will have to mature significantly it’s significantly harder to raise capital than two years ago. More professional players will enter the industry, the PwCs of this world. Many current advisers–let’s call them advisers–are not good at delivering, and the old school players will enter and lend their knowledge on how to deliver on time and in budget.”
Finally, a few words of advice from the Smart Containers CEO for other blockchain companies:
“More institutional investors will flow in, and that will lead to the rise of security tokens. Institutional investors don’t want a utility token, they don’t know what to do with it… In the future, security tokens will become standard again. But, here’s my message to you, don’t be afraid of the security token, but find a way to embrace it because I think that will be the future.”
This article first appeared on Coincentral
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