I had just learned everything there was to know about the fish in front of me. Now, a small part of its fleshy, red body was in my mouth. Five minutes earlier, I saw a video showing the waters in Fiji where it was caught, where it traveled on ice, and how exactly it ended up inside a sushi hand roll. The massive yellowfin tuna had been tracked across the globe via the Ethereum blockchain.
Each stop on the fish’s journey, from the landing dock to the processing facility to the truck that drove it to Brooklyn, had been catalogued. The demonstration, organized by the startup Viant, was meant to showcase one of the potentially most compelling use cases for blockchain technology. A plethora of startups—as well as major companies like IBM and Walmart—are betting that the tech will change the way goods travel around the world.
A blockchain is essentially a distributed chain of data entries that everyone can view and that can’t be easily altered. In other words, blockchains are digitized, more secure versions of the ledgers that merchants and traders have relied on for thousands of years.
For now, the technology is still in its infancy. The industry around blockchains is riddled with scams, false promises, and has been met with a heaping load of skepticism. Many of the “problems” to which its evangelists have tried to apply it don’t make much sense, like bacon, iced tea, and ending bullying.
But supply chains appear to be a legitimate use case for the technology, tracking materials as they move around the globe. There are promising signs, but also serious hurdles to deploying blockchain tech broadly in logistics. It likely will be years, if not decades, before that happens.
For one thing, during Viant’s demonstration, which took place at the Ethereal Summit, my phone was blowing up with emails. The messages, from United Parcel Service, alerted me to the exact location of a package I was expecting. It’s hard to understand, at least at first, how a fancy new technology could make that system better.
One Shipment of Avocados
But Kishore Atreya, a co-founder of Viant, the startup behind the fish demonstration, says the current supply-chain system is limited. Tracking tech like UPS’s reflects only the data that matters to UPS. “In the package example you have cited, the customer gets only the logistics view and history, but not a holistic view of the product—its ingredients, source, processing, etc.,”
It’s hard, if not impossible, to learn where the sweater you’re wearing or coffee you’re drinking really came from. Shipping a container of avocados from India to the Netherlands, say, involves dozens of people and businesses. Farmers need to drop off the avocados, boats need to pick them up, regulators need to sign off on the container’s contents, and someone needs to make sure that the fruits haven’t gone bad. Most of these handoffs and communications are still done via analog technology.
“There are so many parties involved, up to 30 different parties are all touching one container and they’re just waiting for each other to communicate information,” says Christiaan Sluijs, the CFO of T-mining, a Belgium-based blockchain logistics company. He adds that many corporations still use paper to handle necessary documentation like certificates of origin, invoices, insurance policies, and bills of lading. All that paperwork is estimated to account for one-fifth of the total transportation costs, according to IBM. “That’s a bit stupid because you can send that information in a digitized way,” says Sluijs.
That’s where blockchain technology comes in. The idea is to create a digitized version of the paperwork and allow everyone in the supply chain to know where a shipment is located. That system might live inside a mobile app, and involve other tech, like QR codes, cameras, RFID chips, or internet-connected sensors.
One of blockchain tech’s most appealing features is the ability to facilitate what are known as “smart contracts,” or automated agreements that go into effect when certain conditions are met. For example, when that shipment of avocados reaches the port in Amsterdam, it could automatically trigger a payment to the shipper back in India. Smart contracts could also be used to handle sensitive paperwork, since they’re more secure than an emailed PDF and cannot be easily manipulated.
Lying About Bananas
The hope is that one day, everyone in a supply chain will be on the same, digitized system. Blockchain tech, along with other tools like RFID chips and internet-connected sensors, could be used to track the status of a shipment in real time. Imagine, for example, a sensor that monitors the temperature of a container of bananas, ensuring that they don’t begin to rot. The data is entered into the blockchain, where it can be viewed by anyone and cannot be altered. If the bananas do go bad, everyone will be able to tell when it happened and why.
But what if someone does try to lie about the temperature of the bananas, or some other part of the supply chain? Blockchains are decentralized; no single person or party controls the system, not even the software company that developed it. Any attempt to alter the data would be detected, or potentially cause the system to crash.
That decentralization can make a difference. Sluijs cites a company he recently worked with that was using a logistics software platform to handle its shipments. The software company was soon bought out by a competitor and the logistics company lost all its data. Had they been using a blockchain, the data would have been preserved.
A trickier problem might be if someone reports that a shipment contains avocados, but it’s also secretly carrying a kilo of cocaine. The hope is that the blockchain-powered platform will have a number of fail-safes in place, like maybe a sensor that goes off when a container is tampered with. “There would be alarms and alerts to different entities in the supply chain,” says Carly Guenther, a managing director at Accenture, where she focuses on supply chains.
Blockchain tech can help reduce fraud and mistakes, but ultimately it can’t completely eliminate them. “Blockchain is a quantum leap in trust, but guess what? It’s not a panacea. There are always going to be transactions with human beings and human beings will always be human beings,” says Ramesh Gopinath, vice president of blockchain solutions at IBM, who has been working on the technology since 2014.
Gopinath says he sees two major hurdles to bringing blockchain technology to supply chains—and neither of them have to do with the tech itself. The first is simply convincing everyone in the supply chain, which can involve dozens of companies, that switching to a new system is a good idea. “You’ve got to make sure that everybody in the ecosystem gets something out of it,” says Gopinath. “That is very hard and it takes a long time to figure out.”
The second problem is governance. Because blockchains aren’t centralized, it’s difficult to decide how they should be managed. “Who can use the data? Who can see the data? Who can do analytics on the data? Can they share the data? All of these questions have to be answered to the satisfaction of the ecosystem,” says Gopinath. It’s likely going to take years to solve these issues and to square them with government regulators. If someone says that they can be solved in six months, “I’ll just laugh at them, because it’s not going to happen. You can just tell them, sorry, I’m just not going to believe you,” says Gopinath.
In the meantime, I’ll happily eat more blockchain-tracked tuna. But for the record, it tastes the same as any other fish, even if I know exactly where this one came from.