The freight business, not normally thought of as an exciting new frontier, has become one with the advent of blockchain solutions to streamline operations and potentially reap billions in savings. Dynamo is among the startups drawing new talent and investment to the sector, where it hopes to rapidly achieve significant traction.
Logistics, transportation and supply chains involve moving things around the planet efficiently, with different actors in different places who, while not necessarily trusting each other, must coordinate their actions to achieve complex tasks in a given time. Therefore, the sector is a prime target for advanced applications of blockchain technology.
As explained in a recent Distributed article titled “How Blockchain Technology Is Reinventing Global Trade Efficiency,” the supply chain sector represents billions of dollars in enterprise revenue, but is fraught with losses and inefficiencies resulting from risk, fraud or anachronistic manual paperwork delays. Trade finance - specialized financial services that permit timely processing of invoices and payments for the large number of actors in the supply chain - is a critical part of the process.
The supply chain stream at the Distributed: Trade conference, taking place on June 14 in St. Louis, Missouri, will cover how blockchain technology is being applied to supply chain management and trade finance, and how logistics and transportation businesses can benefit. Many companies active in the sector will showcase their offerings, including Fluent, a blockchain-based financial operating network to streamline supply chain finance, CargoChain, Commerce Bank, Everledger and Dynamo.
Dynamo is a new company that runs an accelerator program and early stage capital fund for companies in the supply chain sector. It will be represented at the conference by its director, Santosh Sankar. Distributed reached out to Sankar to learn more about Dynamo’s offerings and plans.
Sankar explained that Dynamo is a spinoff of the Lamp Post Group, a family company focused on venture incubation and early stage investing, started five years ago by the founders of Access America Transportation - Ted Alling, Barry Large and Allan Davis. Lamp Post’s investments in the logistics, transportation and supply chain industry include Steam Logistics, Reliance Partners, Bellhops, Ambition and AAT Carriers.
“Last year, it became evident looking at Lamp Post Group’s performance that a focus and institutionalization were the next step in our maturation process--and Dynamo was born,” said Sankar.
Dynamo was unveiled in March with a short announcement on the Lamp Post Group website and a Wall Street Journal article titled “Logistics Investors Launch Supply-Chain Technology Accelerator.” The WSJ described Dynamo as “a Silicon Valley-style accelerator for supply-chain technology startups, aiming to draw new investment and talent to the freight business.”
“Dynamo has two sibling entities that we manage separately - an Accelerator and Early Stage Fund - that maintain the same sector focus,” Sankar said, noting that the $3 million Accelerator, run by a core team of seven, will run alongside the $12 million Fund, run by a core team of five.
The accelerator will direct its budget toward startups focused on logistics-oriented technologies such as autonomous-truck operations, drones and software. The Fund will focus on early stage opportunities in the sector.
“The Accelerator and Fund are separately managed entities that share some of the same human capital resources; both are focused on supporting tenacious enterprises now innovating and advancing the logistics, transportation and supply chain industries,” explained Sankar. “The Accelerator’s inaugural cohort will begin in July of this year and culminate in October. Teams will be put through a twelve-week bootcamp that focuses on fundamentally building their businesses by helping them win pilots/trials and ultimately sales opportunities.” Sankar said that the Fund will commence operations this summer.
It’s important to note that Dynamo isn’t focused exclusively on distributed ledgers and blockchain technologies, but on the industry sector in which it operates. Therefore, Dynamo is technology-agnostic. From its point of view, blockchain technology is but one of many tools, and it has no a priori preference for one distributed ledger technology, such as Bitcoin or Ethereum, over another.
“It is important for folks to realize that blockchain is another tool on our belt - we cannot get wedded to any one type of blockchain tech just yet (like we don’t only use one tech stack all the time),” Sankar emphasized. “Since the tech is nascent, we will come to learn it will solve some problems and not others. It might turn out that we ultimately need to develop a different approach to solve our problems - we should continue to maintain an open mind and continue to explore the options and opportunities.”
According to Sankar, there are plenty of opportunities for blockchain technology to solve specific problems in logistics, transportation and supply chains, starting with the “low hanging fruit” - important goals that can be achieved rapidly - in use cases and applications such as: Simplify the Legal Process; Proof of Provenance; and Release of Payments.
Sankar went on to describe each of the above in more detail.
“Simplify the Legal Process: reduce the number of documents and lead times needed to complete each step of the shipping process. Blockchain can be the system of record for trade transactions whereby we remove the paper pushing and focus on delivering greater value. We can trigger actions as a result of certain records being ‘filled,’ and then move through a logical and automated system for import/export, inbound/outbound documents.”
“Proof of Provenance: being able to prove in a timely manner, and with certainty, that an item has taken a certain path through the supply chain. For example, proving that a coffee bean is fair trade, and has gone through a certain roasting process. Given that each part of the chain is verified, the result should be an authentic, auditable record regarding the journey of your coffee beans.”
“Release of Payments: this is big in trade finance but also insurance,” concluded Sankar. “It goes back to simplifying the process - why have a transaction banker verify a wire when we can do it in a secure manner? Or when the driver gets to a dock, why can’t we verify the truck has arrived with the right load to release the lumper [loading or unloading] payment? In the insurance world, why not pair computer vision technology, that can recognize when freight is damaged, with the blockchain to trigger a payout from your insurance underwriter?”
The Dynamo executive added that, like any other market, there will be early adopters of blockchain technology in the supply chain world. “The aforementioned low-hanging fruit still needs to be addressed and as such, some of the first players that might come forth to adopt blockchain-based solutions could include freight forwarders, trade finance providers and warehousers,” said Sankar.
The Distributed: Trade blockchain conference in St. Louis, Mo. on June 14 will address blockchain use cases and applications for the supply chain sector in detail. Live demos of early products and proof-of-concepts will be presented. More at GoDistributed.com/trade.
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