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Blockshipping

Background

Denmark has historically been a world leader in shipping, and it is therefore appropriate that the country’s first known ICO is one that emerges from this very same industry. Not only, however, is it a world leader in shipping, the country has also established something of a reputation for embracing blockchain technology; Copenhagen is the home of the European Blockchain Center, attached to the IT University of Copenhagen. 

It is into this environment that the Blockshipping team are now stepping, organising what they refer to as the GSCP project (Global Shared Container Platform), which is part-funded by private investors on the one hand and the Danish Maritime Fund on the other other. The remaining funding will come from the ICO which we now set out to review.

The general proposition is that the global maritime transport industry, specifically container shipping, is supremely inefficient and that blockchain technology in combination with IoT tracking technology now offers up the ability to bring more optimal, productive use of containers and other resources, whilst reducing waste, costs and the carbon footprint of the global maritime industry. 

In 2016, the Boston Consulting Group itself reported: “Container repositioning is the bane of every carrier. The expenses associated with transporting empty boxes to locations where they can be loaded with cargo represent 5% to 8% of a typical carrier’s total operation costs and amount to USD 15 billion to USD 20 billion each year for the industry. […] Today, there is limited transparency into who has how many boxes and where those boxes are.”

By creating a global public registry of the world’s estimated 27 million containers, and by seeking to incorporate these containers into a ‘grey network’ facilitated by blockchain technology, Blockshipping believes it is tabling a proposition that will revolutionise the industry. 

White-paper

Coming in at just under sixty pages, the white-paper carries a wealth of detail that, at the same time, demonstrates serious engagement with the proposition. It begins by outlining the creation of a blockchain registry that seeks to list over 60% of the world’s vast network of containers within the next four years, whilst also integrating into that same registry a network of IoT tracking devices that will transmit in real-time the precise geo-location of each of those containers. 

The location of containers represents, by all accounts, a serious problem within the industry. According to one insurer, anything up to 50% of all containers belonging to a given shipping company that has gone bankrupt and therefore no longer in effective operation, are lost to the vulnerabilities of what is a largely inefficient tracking system. The problem is so endemic that some insurance companies refuse to provide coverage for irrecoverable containers. 

Added into the proposition is a migration of a large number of what are currently paper-based administrative workflows to blockchain-assured smart contracts that will also effectuate payments in real-time to further speed up logistical pain points that currently plague the industry.

There are also plans to monetise the insights offered up by the data which emerges from such a global registry. That will, however, be something that likely becomes introduced much later in the project’s life-span.

Tokenomics

There will be two tokens that form part of the Blockshipping eco-system – what is referred to as an ‘internal’ token (CPT) and which will be pegged on a one-to-one basis to the US dollar. This will be used to effectuate transactions between the various stakeholders within that eco-system: to cover terminal and depot costs, carrier fees, container management fees etc. 

The ‘external’ token – CCC (Container Crypto Coin) – will be the token sold to market as part of the ICO crowd-fund and will entitle holders to a share in the revenues of Blockshipping’s revenues. The precise details should be consulted in the white-paper, but we summarise below some of the more salient details. 

Revenue Sharing Model

The revenue sharing model is detailed in the above table. It is a graded model where revenue share is calculated in cumulative, diminishing ‘buckets’. To cite the example from the white-paper, if Blockshipping achieve revenues, say, of $0.7 million dollars in a given month, the proportion of those revenues that will be distributed to holders of the CCC token will be: 20% of first $500,000 + 15% of next $200,000, amounting to $130,000 to be distributed back to the fixed mint of 50 million CCC tokens. 

Floor Price

Funds from the project will be allocated to a Market Maker Fund that takes the form of a CCC token buy-back program which will be enacted on the Blockshipping portal (presumably to be hosted at a later stage on its current website).

This program will provide support for the token price (and some reassurance for investors) by implementing a reverse Dutch Auction (i.e. a mechanism by which CCC will be purchased back at above-market rates) at a volume determined by the current funds allocated for this purpose. This mechanism, logically, will only be implemented in the project’s early stages to help avoid a collapse in the token price whilst the business gathers the required momentum to generate the necessary revenues that will ultimately need to buoy the CCC token price. 

Roadmap

The project road map is defined by four phases:

Phase 1 (Completion date:  Q4 of 2018):

Creation of the Global Container Ledger, a Customer Front-end and a blockchain payments processing technology (which may or may not be Ethereum-based – the team appears to be conducting research on this point due to the higher fees of this platform, particularly as the Ethereum network becomes increasingly congested). 

Phase 2 (No completion date currently provided):

Creation of a ‘greybox container’ app – essentially a mechanism to facilitate the optimal use of containers amongst various shipping container owners and users in a bid to create a mutual interest community within the shipping industry.

Creation of a street-turn app – similar to above but implicates optimal use of road transportation in liaison with shipping schedules.

Phase 3 (No completion date currently provided):

Includes creation of a Container Efficiency Dashboard – platform that will allow various stakeholders within the industry to consult current and future availability of containers to help optimise logistical planning. 

Phase 4 (No completion date currently provided):

IoT tracking to be implemented for transportation, security and CO2 emissions. 

Team and Marketing

The marketing aspects of this kind of project generally need to cover two specific angles: i) raising awareness of the project to the outside world in order for the ICO to attract the necessary funds to allow the project to move forward; ii) raising awareness of the project within the target industry itself in order to create the kind of network effect that will ultimately lead to mass adoption. 

Whilst this statement may be speculative, we suspect that the first aspect is less critical for this project than it generally is for most others. Blockshipping appears to be attracting a high degree of interest from within the shipping industry itself, as testified to by the private investors and Danish Maritime Fund who have already lined up to participate. It seems likely that other actors from within the industry will now be using the ICO route to participate themselves. 

In relation to the second aspect, the headline team appears to carry true strength in depth in terms of experience and networks. CEO Peter Ludvigsen has forty years of experience within the shipping industry and has successfully founded and managed his own shipping business over that time. CEO Christian Gyntelberg is a graduate of INSEAD and headed up DHL’s IT arm for the Nordic region for a number of years.

The team’s CTO, Jesper Vedelsby, and David Green, its Business Development Officer, boast eighty years of experience between them. The white-paper and general presentation of the project to the wider public demonstrate the kind of maturity and respect for its audience that are all too often lacking with the ICO world. Whilst no-one can forecast the probability of eventual success for this project with any high degree of confidence, there is certainly one aspect that does appear beyond any real doubt here – this is a team with serious credibility. 

Conclusion

This is a project that easily qualifies as a solid proposition. It ticks the boxes for experience, credibility, viability and the solution it proposes also happens to make for a good blockchain fit. Naturally, the long-term success is dependent on the behaviour of an entire industry and whether it will welcome or resist the solutions that are being offered by the Blockshipping team. One to watch.