TACF18: In the weeds over blockchain use in air cargo

TORONTO – Yesterday, it became legal to buy and sell marijuana for recreational purposes all across this vast country. While the Canadian airwaves were filled with pundits spouting opinions about how to manage this new commodity, at least one speaker at TIACA’s Air Cargo Forum seemed to have one answer to the weed question: Blockchain.

During Tuesday’s afternoon session on “How blockchain will deliver smart and secure supply chains,” most of the speakers were speaking in hypothetical terms about the allegedly unhackable ledgering systems, but Michael Morey, director of advanced cargo solutions for Franwell, Inc., described a real-world system for tracking the movement and distribution of medical marijuana across Canada “from seed to sale” with radio-frequency identification (RFID) technology.

“It’s quite fascinating how the illicit drug trade has been operating,” Morey noted. “They have a very effective system of production, distribution, financial exchange – all of it undergound. And here we are trying to do something above-ground, and we are theoretically struggling with it.”

With a few slides, Morey compared the track and trace capabilities of the legalized weed trade with that of air cargo. Because of the sensitivity of the product, the marijuana trade uses a secure system that can be monitored by regulators and law enforcement. Each plant, he said, has its own unique ID tag which also contains information about where it was grown, it’s maturity, who grew it and where it is being sent.

“When you compare that to the master air waybill [AWB], you can track it through its whole life cycle the same way,” Morey said. While some in the freight world have expressed concern over the transfer of what some might call proprietary data from the shipper to the forwarder to the carrier, and so on, he said we don’t really need to exchange all the data, just the data elements that carry through the whole process that can track the shipment back to is source – or plant, in this case.

Of course, this is not a pure blockchain example, but it illustrates how blockchain can be applied to record all of this information automatically. The hard part will be turning Morey’s RFID tag example into something all parties in the supply chain can trust.

As the moderator, Daniel MacGregor, managing director of Nexiot AG, put it: “What does it take to do blockchain? What do we really need to have in place to make this work?” He then identified four elements that must come together for it to happen: Governance, process, culture and technology.

Panelist Dean Croke, chief analytics officer for FreightWaves, said that “if blockchain is successful, and we don’t have standards around interoperability, it can become another EDI,” referring to electronic data exchange, a standard computer-to-computer exchange format “designed in 1973 that nobody follows.”

Speaker Elizabeth Henderson, senior director of IT strategy and innovation for Purolator, agreed, saying that standardization of the tracking systems “is complicated and hard,” but it is necessary to ensure that everyone in the supply chain understands the same terminology before a blockchain system is set up.

Another panelist, Brian Glick, CEO of Chain.io, also cautioned that the rest of the world most likely will impose standards of blockchain use before they can be agreed upon by the logistics industry. Glick paraphrased an audience comment he had heard earlier this year at an LTL trucking conference, that the air cargo industry, as a whole, is not going to blockchain, “we will be blockchained by our customers.”

“I think the marijuana system is a great example that individual industries are going to be developing blockchain solutions for all sorts of compliance for visibility or financial reasons,” Glick added. “As an industry, we’re going to have to be much, much more agile in being able to participate in lots and lots of blockchains, not just one.”