ShipChain CEO Talks About Its Project
The CEO of ShipChain, John Monarch, has recently spoken to the media about the issues that ShipChain was trying to solve in the logistics industry and how the market could easily be improved by using the services that are currently being offered by the company. According to the CEO, there are several solutions that can be made by applying the blockchain on logistics.
Processes like price increases, bad handoffs and administrative issues can be easily solved. While many of these problems cannot be seen in the industry normally by the people who are on the outside, they turn the whole process into something more cumbersome and hard to administrate.
Monarch explains that the people involved in the industry have many misaligned incentives and this often results in poor data handling, gratuitous markups and even in diversion of the blame during the many phases of the logistics process.
The Case For ShipChain
According to the CEO of ShipChain, the best way to demonstrate how some of these issues plague the industry is by simply ordering something on the internet. As soon as the order is placed, the program will notify the “shipper” that they have an order. This is normally done via platforms like ShipStation or ShipWorks, according to the executive.
The business selling the product will then prepare to send the order via a third party logistics operators that are commonly known as the broker. Brokers charge up to 30% to coordinate the movements of packages. The broker provides tracking services and coordinates the ships, trains and planes that carry the goods.
The main problem that creates misaligned incentives starts with the brokers. They do not want to lose their power, that is, their link with the carriers. Because of this, they often do not provide communication between the carriers and the shippers.
It is also the job of the brokers to keep the products safe and it was estimated by the CEO of ShipChain that about 20% of the price in the final product is because many products are lost and the brokers make the prices of their services higher to compensate that, as they have to pay for damaged or lost goods. Sometimes the brokers even try to flee from the blame.
How ShipChain Solves The Issue
To John Monarch, the solution is very clear: you have to cut the middleman to decrease costs and problems. By using a way to connect the shippers to the carriers without the brokers, the price of the products could decrease by 30% or more.
ShipChain intends to solve these issues by creating a single “source of truth” that holds the payment in escrow and helps to handle the transactions and logistics of the product. Because of the immutable ledger of the blockchain, everybody knows who owns the package in any time and the blame for accidents is always clear.
By using the Ethereum network, the program is able to track the goods and everybody have to be thorough and informative to keep accurate records of everything that is happening. ShipChain has the potential to eliminate the brokers and replace them with technology. This decreases the costs and allows carriers to find shipments easier.
Shippers will have a huge increase in their profits and will be able to sell their products for lower prices. This can increase the profitability and the efficiency of the industry.
The company is formed by many executives with experience in this field and has advisors like Chris Perdue and Kevin Harrington, which are both fairly known in their businesses.
While ShipChain had a bump in the road during early this year because the South Carolina’s Office of the Attorney General ordered the company to cease its operations in the state, it looks like ShipChain has a bright future ahead of itself.