From caravanserais on the Silk Road, to the supply chains of the Roman legions and the advance of the Allied Forces in 1944, logistics & supply chain management is one of the oldest, most important industries in the world; diverse in its organisation and global in its scale. Over the last half century the exponential increase in international trade and an increasing globalisation of economies has resulted in a logistics market expected to reach $15.5 Trillion by 2023.
Despite the rapid growth, digital solutions to streamline business processes have failed to develop anywhere close to the rate of demand. Though logistics is an essential cog in the global economy, systems have developed inefficiently and logistics management on a global level remains relatively unconnected.
The logistics industry is one that is heavily reliant on paper-based, out-of-date practices. To get goods from A to B, businesses are forced to use a number of different third parties reliant on archaic technology, inefficient methods of communication, and with varying standards of competency.
As a result the B2B transactions suffer from poor quality of data, limited interactions with those on ground level, lost or damaged shipments and fractured relationships as a result of ill-informed communication throughout the consignments' journey.
An example might be when one of numerous trucks in a supply chain breaks down or loses a pallet in a remote area. Because the truckers are usually sub-contracted by a broker and not directly linked to the original supplier, the parcel can travel through a number of different parties before the exact problem is revealed. Most often drivers will not carry the technical facilities to make immediate contact with the supplier so are forced to keep a paper trail of any issues. As a result delays in contact or human error in the transfer of data can lead to inaccuracies of reporting and as a result a flawed data trail.
The inaccuracy of data and speed of which it is communicated encourages disputes across all parties involved across the supply chain. This then leads to payment disagreements and opens up questions of accountability, resulting in significantly delayed shipments. Ultimately a paper based system results in a loss of revenue, significant delays in shipments and damages relationships between businesses.
So what is the solution? – This is where Open Enterprise Logistics Foundation ('OEL') comes along.
Goals, Vision & Roadmap
OEL is a non-profit organisation founded by existing company OpenPort, whose creation is intending to bring numerous stakeholders and supply chain leaders in the industry into an alliance. Together, these key figures will form the basis of a board that will make decisions collectively to improve current flaws in the system and propel the use of OpenPort’s blockchain-based solution.
OpenPort, an established company working within the shipping industry, has been connecting transporters and shippers together for the last three years. By equipping truck drivers with the technologies to facilitate real-time visibility and to send locations passively, they have been working towards moving from paper, to digital. OpenPort whilst not originally a blockchain company, is aware of the advantages that decentralised ledger technology can bring, to greater improve trust, the next logical step is to move the business over to the blockchain.
Because of the sheer size of the sector, a crucial part of the projects success will be reliant on:
1) On-boarding a number of significant parties within the industry;
2) Ensuring that all of these members on the board can work cohesively; and
3) That all members are able to implement the required adjustments into their operations processes and work in synchronisation.
Herein lays a major challenge for the project. Not only is it important that the tech has to work without flaw, but success will also be dependent on the leadership's ability to secure these key alliance members.
Value of project - Use Case
2018 has been the year that the big companies have been dipping their toes in the blockchain world. The likes of IBM, Alibaba, Amazon and Google have all been looking towards blockchain technology to improve their current infrastructures. Whilst a number of industries are attempting to solve issues separately, a key part of the OEL Foundation's vision will be to unite efforts as part of an alliance. The OEL Foundation has been established so that those within the supply chain industry can come together to work toward a shared objective that encourages adoption of a single solution that encompasses all parties. Because of the fragmented nature of the industry, success would not be possible otherwise.
In the current system, fiat currency is used as an incentive to reward drivers for passing on data. Data contributors are rewarded by completing micro-tasks such as on time delivery of a shipment, for having a GPS device enabled throughout the length of a journey, or for the successful reporting of an exception. On completion of the ICO, OPN tokens will be implemented into existing supply chains as a replacement for fiat.
By switching to a blockchain-based system (initially built on Ethereum) actions along the supply chain are recorded digitally as immutable entries on the blockchain. This means all records throughout a shipment's journey such as locations, handovers and exceptions along the way are all linked to an indisputable digital agreement (i.e. a smart contract). This comes with the following benefits:
- Through the use of a distributed ledger, all entries form a tamper-proof log of activity across the consignments journey. – This limits room for dispute and allows immediate shipment updates to be shared across the network transparently.
- This transparency reduces room for disagreement and improves efficiency. All parties are able to see alerts as they happen, allowing those affected to make decisions in real time, based on the entries provided by those on ground level.
- Because of the improved trust and automation that comes with a blockchain-based system. The need for a middleman is also greatly reduced, thus saving overheads on third party contractors resulting in significant supply chain savings.
- In addition to this, documents, fees and payments can be all be transferred instantly through the use of a predefined smart contract. Once all parties are satisfied, manufacturers, customer and shipping companies, all parties can be paid almost immediately. Cutting average payment speeds down from months to a small number of days.
There is no doubt that the vision for OEL Foundation is vast and the use case is there. If successful in even just a few regions, the OEL Foundation will have made a massive impact in the logistics industry. However, as investors we need to consider that the ease of implementation in an established industry of this size is not something that can be undertaken effortlessly. In OEL's case adoption will be dependent on involvement from a number of industry leaders. Adoption will require a huge disruption of the current system and ease of implementation will be location based.
The OEL Foundation token sale interestingly is split into two parts. The first phase, of which the date is yet to be announced, is expected in Q3 of 2018. The price for each OPN token will be $0.50, the soft cap for the will be $4 Million and the hard cap is placed at $15 Million. The next stage of the token sale is then due a year later in the second half of 2019. By this time the platform will have moved from an Ethereum based test net over to their own OpenPort main net.
Splitting a token sale into two parts is definitely a confusing choice and very much a unique angle for an ICO, which immediately brings forward the question, when is it best time to invest?
So, during the second ICO phase, the price of the OPN token will be bound to the current market price of the token at that particular time. As a safe guard, early investors can seek re-assurance that at the point of the second sale if there are any negative adjustments in market price of the OPN token, original participants from the first sale will be re-imbursed with OPN from the reserves (10% of which has been put aside). – So if you are looking to invest and hold the OPN token, the best time to invest would be during the first sale.
The OPN token has a fixed supply of 100,000,000, a relatively low to medium supply, comparable to the likes of Ethereum and Waves. Proceeds raised from the ICO will be used to develop the OpenPort blockchain, to hire developers and build an infrastructure, to help market the project and to cover legal and administrative expenses. As previously mentioned 40% will also be held in reserves and stake rewards.
Token distribution is as follows:
OEL Foundation Team: 10%
OpenPort LTD: 10%
Advisors / Partners: 5%
Community Rewards: 2.5%
Main Sale: 26%
OpenPort CEO Max Ward is the visionary of the OEL Foundation. Over the last 15 years Max has amassed invaluable experience as President or Director at a number of logistics companies that include DHL, Agility and Panalpia. Before moving to Hong Kong, Max originated as an entrepreneur from Silicon Valley during the ‘Dot-Com’ era. His combined experience in both of these sectors puts him a great position to lead the project.
CTO Mark Nelson, also currently working Hong Kong, has amassed a great technical skillset working as a Project Manager for Bupa Global, SGCIB, Royal Bank of Scotland and Prudenential Corporation Asia. Recently Mark has received invaluable experience working for Market Acumen as a technical consultant of a cryptocurrency trading system, notably he has recently also worked with integrations with Ethereum and the Neo blockchain.
Head of the Alliance Morten Damgaard Andersen has extensive experience as a CEO for a number of large scale logistics companies including, most recently, Agility Logistics, which has a turnover of more than $350 Million and employees 3500 people. Now COO of OPenPort, Morten is a very experienced leader with a wealth of success under his belt.
Advisors wise, Sweetbridge Alliance President Mac McGary is a great accompaniment to the team. Sweetbridge a multi-layered finance strategy are also looking at moving supply chains onto a decentralised ecosystem, his addition to the board makes perfect sense. In addition to this founder and CEO of ICO marketing giant Amazix, Jonas Sevel Karlberg is also an advisor, a man in a great position to help raise awareness of the project in the ICO community. Another worthy mention is Paul Good who leads one of the largest logistics companies in Indonesia.
At the time of writing the OEL Foundation is very much an emerging project. They have yet to announce a date for their ICO and their Twitter, Linkedin and Facebook pages are in their infancies with fewer than 500 followers. That being said their Reddit community is stronger than many ICOs and though their telegram group is small it is active with relevant intellectual discussion rather the dreaded ‘Moon Lambo’ spam that plagues other projects.
Taking this into account, the OEL Foundation ICO is definitely a project that is under the radar at the moment. In their favour there is a working project, they have great leadership, an established network and some very experienced alliance partners. Spanning multiple countries, including the Philippines, China, India, Indonesia, and Pakistan, the company has access to a number of different regions to work with. Alongside this, new members of the alliance are emerging from all areas of the globe, including South Africa and North America.
With an expansive network and existing customer base that includes multi-national company Nestlé, OEL Foundation rub shoulders with a number of influential figures in the logistics industry. With this in mind If the hardcap is not reached it is very likely that private money will flow into the project as the alliance gathers momentum.