Last week, CargoX created waves in the maritime sector by raising USD 7 Million in 7 minutes from micro-investors during their initial coin offering (ICO).
In an exclusive interview with Sea News (SN), CargoX Founder & CEO, Stefan Kukman (SK), had this to say:
SN – What inspired you to begin this enterprise? How did it start?
SK – After many years working as the national/cluster sales manager for a major logistics provider, I needed a new challenge, but there weren’t any opportunities within the company I was with. I decided to leave, and I founded a company called 45HC.com. We started slowly, received a few awards, and soon attracted some small-scale angel investment.
While 45HC.com was being built up, I met a lot of people involved in initial coin offerings (ICOs). That’s when I started realising that blockchain technology was an exciting new development. I was like a kid looking at the flashiest toy in the store. Soon, I started thinking about ways to use blockchain technology in logistics. What I realised, after some research, was that with blockchain, we could create a global network without spending hundreds of millions of dollars. Even better, blockchain lets you move quickly, with a small team, and it doesn’t require the backing of a massive company. That’s when I knew that there was potential for a Smart Bill of Lading using blockchain. What matters is that we can move quickly to secure this high value document, send it anywhere in the world, and eliminate an incredible amount of waste.
SN – How has the concept been received by the market?
SK – Over the last few years, the industry has grown more aware of how inefficient our current technology is. There’s a strong market demand for a blockchain solution that eradicates the inefficiencies associated with paper bills of lading. Our Smart Bill of Lading is already receiving incredible support, especially from forwarders. There simply isn’t anything that can rival blockchain out there. It’s not just CargoX either. Maersk and IBM are working on their own blockchain solution, and there’s a general excitement in the industry, and that momentum is pushing CargoX to get our solutions to market as quickly as possible.
SN – The shipping industry has always been “traditional”. In your experience, is the industry ready to embrace new technology? What hurdles did you have to overcome?
SK – Some aspects of shipping haven’t changed in many years, and people who work in this industry are often set in their ways. That’s why we aren’t even bothering with carriers (shipping lines) right now. Getting them to adapt will take too long, and there are too many obstacles. With that in mind, choosing our target group was easy. We needed to partner with companies (apart from shipping lines) that also issue bills of lading, operate in competitive markets, and are willing to go the extra mile to deliver added value to their clients. Those companies, of course, are logistics companies.
We are approaching this market from multiple angles. One way is by helping logistics companies offer their customers savings and an improved user experience (among other benefits). We also expect importers/exporters to start asking their logistics providers for Smart B/L due to associated cost savings. In addition, the CargoX platform is market neutral. Everyone can use it. In future if we create a DAO (decentralised autonomous organisation) our partners can own a part of it.
SN – What is your target audience?
SK – Our target audiences are both logistics companies who can issues Bill of Lading on one side, and on the other, we are targeting every importer and exporter that is engaged in global trade.
SN – Who do you perceive as competition? What sets you apart?
SK – Maersk and IBM have received a lot of publicity for their blockchain-based trade platform, and WaveBL claims to be working on something similar, but I don’t have enough info about them. What I do know is that the Maersk-IBM project is very different from ours. We just don’t see how it will be possible to involve customs in Brazil, Russia, China, etc. in a private ‘blockchain’ project in the near future. Moreover, there are industry concerns about branded products. It is unlikely that other carriers such as MSC, CMA&CGM, or Cosco would use the Maersk platform. In addition, I don’t think that there will be dozens of separate blockchain solutions on the market. It’s far more likely that there will be one or two neutral solutions, where the logistic providers are the owners. CargoX meets this demand for a market neutral product. Our product guarantees that sensitive trade data is encrypted and only visible to parties that have the right keys, which are also highly encrypted. CargoX will have an open platform, connecting several IoT providers using the same ‘token’. We just announced a partnership with MakerDAO, where we are teaming up to create Smart L/C – a blockchain solution that improves on today’s Letters of Credit, which are issued by banks as payment guarantees.
SN – What implications does this concept have for the container shipping sector?
SK – CargoX will deliver increased efficiency across the shipping industry, by getting rid of massive amounts of paper work and eliminating the costs associated with sending millions of paper documents around the world. This represents billions of dollars in savings. That’s because, in addition to eliminating demand for express couriers, the CargoX platform reduces the need for clerical manpower, paper and ink and printers, and saves millions of hours wasted waiting for the right paperwork to show up, and much more. Finally, and this is the most important part, every action is irreversible, transparent and digital. Our digital Smart B/L can handle other functionalities beyond just replacing bills of lading – it could eventually become multipurpose/multivalued Global trade tool.
SN – How do you see yourself expanding? What is CargoX’s plan for the future?
SK – We are engaged in a step-by-step growth plan that is already well underway. We promised a test shipment in Q2 of this year, but we’re excited to announce that the MVP will be ready in a month. We already have partners that are eager to implement Smart B/L. We are starting to get attention from importers/exporters, as well as from logistics companies that want to participate in our trial shipments, because they want to be the first-movers in their industry. People are realising that technological developments happen fast. Even the biggest and most ‘untouchable’ companies know that they could be left behind if they don’t keep up. And being small is a huge advantage, you are agile and can respond fast. We are establishing as many partnerships as possible this year, while perfecting our product and testing it so that we are ready to scale. Just one contract with a top 10 logistics company means that we are talking about more than million Smart B/L’s in the near future. We’re making sure that we are ready.
SN – What advice do you have for other startups in the shipping industry?
SK – My advice is to be brave and just do it! Start out by asking your clients what they need, and then create a solution for them. Even if you don’t succeed at first attempt, don’t stop. Mistakes and failed attempts are a learning opportunity. Don’t be discouraged. Believe in yourself. Shipping (and logistics in general) is an area of incredible opportunity, as you need industry specific knowledge – not just coding skills. Logistics hasn’t attracted the same number of startups as other sectors, which actually adds to the potential, and makes it more attractive to people with good ideas.
An expression that I came up with during a difficult phone call speaks to this – ‘If the only benefit of electricity would have been a light, humanity would still be using candles.’
Sea News Feature, February 23