Interview originally published at https://www.supplychainadria.com/vjeran-ortynski-cargox
Interview conducted by Goran Vranar, editor of Supply Chain Adria
Date: February 2020
Vjeran Ortynski, Chief Business Development Officer of CargoX, has rich experience at various managerial positions in ocean cargo shipping companies cargo-partner, DHL, Kuehmne+Nagel and Milšped. We talked to him about the blockchain technology and the CargoX platform.
What is Blockchain technology and how does it work?
Blockchain is a concept of a trustworthy, digital, public transactional network, used for recording transaction events in a publicly distributed ledger. Strong cryptographic security enables a blockchain to be distributed among public computers - each computer in the chain validates all transactions in a way that it makes it impossible to fake or forge transaction events. The whole system operates without a central computer system, so it is impossible to manipulate or shut it down, and it does not have a ‘central administrator’.
Here is how it works: a specific public blockchain network (the Ethereum network, for example) requires computer users or server operators to run cryptographic software that listens to network requests, calculates responses, and validates transactions. The process is called “mining”, as validators are randomly rewarded with algorithmically provided cryptocurrency in exchange for their digital ledger services.
The Ethereum network blockchain is specifically well known, as it makes possible not only the storage of cryptographic assets, but also the creation of programs called smart contracts, which enable the development of complex blockchain software solutions to be implemented in the logistics, financial, and insurance industries, among many others.
What are the benefits of Blockchain technology?
Blockchain technology is an addition to the internet as we know it - it enables trust in a trustless world. This has led many scholars to call it “the internet 3.0” - and they believe it will enable a new class of business solutions that have never been seen before.
As a concept, the internet 3.0 is an upgrade of the internet 2.0, which developed after the year 2000 as the service web (the internet of social networks, e-commerce websites, communications protocols, and similar), and the internet 1.0, which brought us basic hyperlinked content when academics started exploring the internet in the 90s.
Blockchain enables companies to trust each other when conducting business and transactions through public internet spaces, as the environment is exact, supervised by thousands of validators (miners), and distributed in a way that it does not have a central owner who could exercise traditional B2B methods, such as vendor lock-in, hidden fees, and similar.
The basic feature of a blockchain, or digital public ledger, is its immutability, and the capacity to provide a trail of transactions from the origin point of that specific blockchain network, while still preserving privacy and business confidentiality among partners.
When was CargoX established and are you today a start-up, scale-up, or mature company?
CargoX was established in 2018. We introduced the MVP of our platform only three months after conception, and we also launched the platform live in the same year.
During the last two years, we have received significant awards and nominations - International Road Transportation Union World Congress Startup competition winner (among 77 startups), Financial Times Intelligent Business 2018 award nominee, SXSW Pitch 2019 Finalist, #DataccioConnect blockchain Innovation Award 2018, we were listed as a FreightTech 100 2019 and 2020 company, and, in November 2019 we were impressively voted the Most Innovative Solution 2019 and best Blockchain Innovation of the Year 2019 at Transport & Logistics Middle East by a panel of global audiences and experts, against TradeLens, the Panalpina Pharma blockchain, and the Digital Silk Road initiative. We often find ourselves competing with top companies in the fields of logistics and other innovations.
We are just concluding our phase of compliance and certification by the international P&I club (protection and indemnity insurance) (NOTE: just after the interview the P&I approval was received, see news here), and we are entering a rapid growth phase. We are in contact with some of the leading global ship line operators and freight forwarders, as well as governmental institutions that want to use our technology to optimize their processing performance and gain valuable insight.
How does CargoX use blockchain technology, and what services does CargoX offer?
CargoX specializes in blockchain document transactions. Accordingly, we first rolled out services for the supply chain industry. In ocean shipping, documents of title, called Bills of Lading, must be sent through courier services, independently of cargo, and in the event of loss, tampering, or damage to the document, the importer is exposed to extremely large costs and delays before being able to claim the cargo.
Our innovation was to enable companies to transfer these documents through a blockchain document transaction system. This is quite similar to using e-mail or transfer money through online banks - but here, users can actually transfer the ownership of a document, and then use blockchain technology to unequivocally validate the current owner.
Blockchain, in our case, provides a tamper-proof audit log of document ownership transactions, and it provides companies with better visibility of their global processes - while at the same time saving them weeks or days, and up to 90% of the document transfer cost!
Who are CargoX’s clients and where is your market?
Our clients are all the world’s freight forwarders aiming to digitize their external document processes with the most secure and reliable technology currently available.
Even though we were focused on Bills of Lading for ocean shipping at the beginning, the third generation of our platform opens new optimization opportunities to all industries - we provide Letter of Credit functionalities and other trade document flows for the financial industry, and we can easily integrate into enterprise processes in the manufacturing, trading, energy, and services industries.
Who can benefit from your services, what industries and markets?
Any company that needs to securely transfer documents can start using our platform immediately, and we expect the need to grow.
We need to mention that companies reap benefits due to the time and money saved by sending important documents through our system, they are also provided a unified, integrated, single-point-of-access document archive at the same time.
What are your plans for development in the near future?
We have just closed the development cycle of our 3rd-generation platform, which opens our technology up for all industries with the need to lower costs, risks, and time spent when transferring highly sensitive documents.
The launch coincides with our company finalizing its P&I club certification - so we are planning to grow rapidly in the next few years.