Tuesday, October 1, 2019

Blockchain Container Shipping System Suspended Due to Lack of Traffic

Regulatory Concerns Seemingly Spell the End of System
Shipping News Feature

HONG KONG – WORLDWIDE – Container shipping industry focused blockchain initiative 300cubits, has decided to suspend the operation of its Booking Deposit Module (System) effective on October 1, 2019.

300cubits is recognised as the one of the first to apply blockchain technologies in shipping. The TEU tokens created by 300cubits are still one of the more recognised digital assets in maritime space. Headquartered in Hong Kong and founded by a two veterans from the shipping and financial industry in July 2017, the 300cubits applies technologies to tackle ‘pain points’ in the shipping industry. The Booking Deposit Module is the first project of 300cubits.

The system started accepting trial shipments in March 2018 and was launched into live production in July 2018 with varying responses. The system saw participation from the largest shipping lines such as Sealand (part of the Maersk Group), CMA CGM, MSC and Cosco, with more than a dozen shippers having tried the technology.

In addition to those who have actually used it, over 100 shippers have registered in the Booking Deposit Module to get their allocation of TEU tokens while the operators say many more shippers have contacted 300cubits and showed interests in the system’s solutions.

When using the system, both carriers and shippers were careful about their commitment. Nearly all except one shipment where booking deposits were placed were executed according to the booking.

However, the company says that the transaction volume through the system have been far from commercial. Only a couple of hundred containers have gone through the Booking Deposit Module, which, although that may seem plenty among the few available shipping blockchain projects, is not sufficient to keep the process going commercially.

300cubits said that the lack of clarity in regulatory regimes surrounding digital currencies proved to be the greatest hurdle in the company’s marketing efforts and that many potential users simply shied away from trying, being not sure about what regulatory measures the authorities may take. A potential partnership with INTTRA, one of the largest shipment booking portals in the world, had to be stopped at the eleventh hour due to regulatory concerns.

300cubits also learnt that shippers face bigger booking pain points than rolling bookings, which is what the system is designed to solve. Instead, these shippers complain that they often could not get their bookings confirmed during peak season despite their booking volume remaining within contract commitment. Moreover, the lack of liquidity for the TEU tokens, and the volatility of all cryptocurrencies in general, also cast a constant doubt among the users on whether the value of the tokens could be realised.

From 300cubits’ experience, many of the core blockchain features like immutability and anonymity are either not intuitive, or unappealing, to the business users. Blockchain systems have to prove interoperable with central server based systems in the commercial applications, all of which led to 300cubits finding that business users are comfortable with the server based systems.

However, in the view of 300cubits, the equality imbedded in the system architecture of blockchain could be instrumental for delivering business alliance solutions. Blockchain allows a user to participate not only as passive user, but also as owner or administrator of the system and the data, which provides an equal footing for otherwise competing industry players to join forces in their service delivery.

With the system being suspended, 300cubits says it will burn at least 75% of the TEU tokens that have not been sold or picked up by the industry users. Going forward, 300cubits will burn even more TEU tokens as the ones currently being allocated to industry users circulate back to 300cubits.

300cubits has said that it will continue with its other projects. The operation has been engaged with a leading telecommunication company in the Middle East to promote the use of blockchain in other areas of transportation. 300cubits will also explore the use of other technologies in areas which are consistent with the competence of the founding team.