Sup­ply chain se­cu­rity

Aus­tralian firms are ex­plor­ing the use and po­ten­tial benefits of blockchain tech­nol­ogy in trans­port

Australian Transport News - - Contents - WORDS AN­JALI BEHL

The state gov­ern­ment-owned in­vest­ment com­pany Queens­land In­vest­ment Cor­po­ra­tion (QIC) ex­pects “ma­jor changes” in the trans­port sec­tor us­ing new tech­nolo­gies such as blockchain. In its re­cent red pa­per, Blockchain is

Knock­ing at In­fra­struc­ture’s Door, QIC states that although au­ton­o­mous ve­hi­cle (AV) tech­nol­ogy that al­lows ve­hi­cles to op­er­ate fully without a hu­man driver (Level 4 au­to­ma­tion) is still 5-10 years away from com­mer­cial­i­sa­tion, and up to 20 years away from univer­sal adop­tion in Aus­tralia, the next two decades will see sig­nifi cant strides in new tech­nolo­gies such as blockchain.

Car man­u­fac­tur­ers like Toy­ota, Ford, Honda, Hyundai and BMW are cur­rently ex­plor­ing the use of blockchain tech­nol­ogy (BT).

“At the mo­ment, blockchain tech­nol­ogy is be­ing used in the au­to­mo­tive in­dus­try pri­mar­ily to help fa­cil­i­tate pay­ments. But broader ap­pli­ca­tions are on their way,” the QIC re­port notes.

“The benefits of wide­spread adop­tion could be im­mense: less risk-tak­ing driv­ing re­sult­ing in fewer injuries, deaths and eco­nomic loss.”

The same ap­plies to freight trans­port, where benefits of this tech­nol­ogy in­clude im­proved ef­fi­ciency, greater trans­parency, lower op­er­a­tional and main­te­nance costs, and po­ten­tially im­pen­e­tra­ble net­works that al­low se­cure move­ment of goods across the var­i­ous links in a chain.

CRE­AT­ING NEW VALUE

QIC prin­ci­pal global in­fra­struc­ture Ti­bor Schwartz says the in­vest­ment fi rm con­sid­ers blockchain to be one of the most dis­rup­tive tech­nolo­gies today, “po­ten­tially rat­ing sim­i­lar to what the in­ter­net and mobile telecom­mu­ni­ca­tions have done over the last 25 years”.

QIC notes that the trans­parency of­fered by BT opens up in­vest­ment op­por­tu­ni­ties and re­duces ad­di­tional costs such as those paid to get trans­ac­tions through. Blockchain

tech­nol­ogy “fits into the dis­trib­uted stor­age pic­ture as a plat­form that en­ables both start-ups as well as large or­gan­i­sa­tions em­brac­ing dis­rup­tion to cre­ate new value”, QIC states.

“For start-ups, thanks to blockchain, ac­cess to cap­i­tal would no longer be a hur­dle lim­it­ing the abil­ity of peo­ple to in­no­vate. The blockchain makes pos­si­ble an ex­change of trust and thus re­moves the need for in­ter­me­di­aries who charge fees to fa­cil­i­tate, val­i­date and ex­e­cute trans­ac­tions.”

Mar­ket re­search com­pany Tech­navio’s anal­y­sis pre­dicts BT mar­ket to grow steadily at a com­pound an­nual growth rate (CAGR) of around 56 per cent by 2021. An in­creas­ing num­ber of Aus­tralian com­pa­nies across var­i­ous sec­tors are ex­plor­ing the op­por­tu­ni­ties associated with BT, with many trails in the pipe­line and some al­ready un­der­way.

A re­cent ar­ti­cle in The Aus­tralian, ti­tled ‘Port of Mel­bourne pon­ders driver­less trucks, blockchain’, states that the Port of Mel­bourne is plan­ning to im­ple­ment BT to “en­hance main­te­nance, im­prove se­cu­rity and en­hance trade at the fa­cil­ity”. De­tails of this ini­tia­tive will be cov­ered in a sep­a­rate fea­ture in ATN in the com­ing months.

SUP­PLY CHAIN SE­CU­RITY TRIAL

DP World Aus­tralia re­cently par­tic­i­pated in a global blockchain tech­nol­ogy trial that tested sup­ply chain se­cu­rity ef­fi­ciency across two con­ti­nents.

The trial in­volved us­ing a new sys­tem de­vel­oped by Aus­tralian blockchain com­pany TBSx3 to tackle the is­sue of coun­ter­feit prod­ucts.

The blockchain sys­tem was suc­cess­fully used on a global road and sea sup­ply chain stretch from South Aus­tralia’s Coon­awarra re­gion to the port of Qing­dao in north- east China – a dis­tance of more than 8000 kilo­me­tres. Other part­ners in the trial in­cluded global lo­gis­tics ser­vices op­er­a­tor DB Schenker, in­ter­na­tional con­tainer ship­ping line Ham­burg Sud and Aus­tralian wine pro­ducer IUS.

The TBSx3 ar­chi­tec­ture used “mil­i­tary­grade” 44 al­phanu­meric char­ac­ter se­cu­rity cryp­tog­ra­phy as op­posed to the com­mon six- digit pub­lic cryp­tog­ra­phy.

The sys­tem pro­vided three lev­els of lo­gis­tics se­cu­rity, in­clud­ing: • Ad­vanced pro­pri­etary sys­tems de­vel­oped

by ma­jor port and ship­ping op­er­a­tors • New TBSx3 se­cu­rity blan­ket into which

the pro­pri­etary sys­tems were in­te­grated • Unique and dy­namic dis­trib­uted blockchain ledger that was ac­ces­si­ble to all par­tic­i­pants in the chain, pro­vid­ing real-time in­for­ma­tion and up­dates dur­ing all cus­to­dial changeovers. Fed­eral in­dus­try, in­no­va­tion and science min­is­ter Arthur Sin­odi­nos sup­ports the use of BT across the trans­port and lo­gis­tics

“Thanks to blockchain, ac­cess to cap­i­tal would no longer be a hur­dle lim­it­ing the abil­ity of peo­ple to in­no­vate”

sec­tor and says the tech­nol­ogy of­fers sup­ply chain par­tic­i­pants op­por­tu­nity to sub­stan­ti­ate the le­git­i­macy of goods, which helps pro­tects their own rep­u­ta­tion.

“Blockchain is an ex­cit­ing tech­nol­ogy with great po­ten­tial for Aus­tralian busi­nesses and SMEs. It prom­ises to re­duce costs, cre­ate new mar­ket op­por­tu­ni­ties and trans­form in­dus­tries,” Sin­odi­nos says. “Im­por­tantly, the tech­nol­ogy pro­vides a new op­por­tu­nity for Aus­tralian ex­porters and their cus­tomers to ver­ify the au­then­tic­ity of their prod­ucts, pro­tect­ing the rep­u­ta­tions and brands of both Aus­tralia and Aus­tralian busi­ness.”

The Or­gan­i­sa­tion for Eco­nomic Co- op­er­a­tion and Devel­op­ment (OECD) es­ti­mates the global trade in coun­ter­feit prod­ucts to be worth nearly half a tril­lion dol­lars an­nu­ally. Mean­while, in­ter­na­tional po­lice agency Interpol es­ti­mates that ev­ery year fake phar­ma­ceu­ti­cals kill over a mil­lion peo­ple across the globe.

TBSx3 chair­man An­thony Ber­tini says the trial si­mul­ta­ne­ously tested the ro­bust­ness of their BT sys­tem for ev­ery cus­to­dial link in the chain, and ver­i­fi­ca­tion pro­to­cols for both bulk prod­uct and in­di­vid­ual items for re­tail­ers and con­sumers at the end of the chain.

“In terms of the num­bers of part­ners si­mul­ta­ne­ously in­volved and the chal­lenges posed for res­o­lu­tion of in­te­gra­tion with mul­ti­ple ex­ist­ing pro­pri­etary se­cu­rity sys­tems, we be­lieve this can be de­vel­oped to be­come a new se­cu­rity bench­mark.

“A TBSx3 re­search team based in Syd­ney man­aged the mul­ti­ple cus­to­dial changes with mul­ti­ple part­ners in the 8100-kilo­me­tre jour­ney: si­mul­ta­ne­ously, a TBSx3 di­rected re­search team in both Syd­ney and Beijing de­vel­oped con­sumer pro­to­cols to ver­ify gen­uine prod­uct at the end of the chain in su­per­mar­kets and AR (aug­mented re­al­ity) re­tail cen­tres,” Ber­tini says.

Founder and direc­tor Mark Toohey says the TBSx3 sys­tem has been de­signed to be both “prod­uct and sys­tem ag­nos­tic so that it can have the widest pos­si­ble ap­pli­ca­tion. We are confi dent that it can be in­te­grated with any ex­ist­ing pro­pri­etary sup­ply chain se­cu­rity sys­tem and used for any kind of prod­uct”.

“It has been pur­posely de­signed to re­duce the sup­ply chain in­stal­la­tion and in­te­gra­tion cost and en­sure a ‘ whole of chain’ se­cu­rity so­lu­tion, which can be con­tin­u­ously mon­i­tored from the be­gin­ning to the end of a sup­ply chain and when­ever and wherever nec­es­sary for an in­cre­men­tal cost, up­graded. TBSx3’s mil­i­tary grade cryp­tog­ra­phy, to­gether with blockchain’s dy­namic, con­stantly chang­ing, live and (for the le­git­i­mate part­ners) trans­par­ent dis­trib­uted ledger may dra­mat­i­cally change the se­cu­rity equa­tion,” Toohey says.

Re­searchers at Prince­ton Univer­sity in the US have es­ti­mated that the math­e­mat­i­cal level of dif­fi­culty for any­one at­tempt­ing to break into blockchain en­cryp­tion is vir­tu­ally im­pos­si­ble. To pen­e­trate the sys­tem, a person would have to “break

“We op­er­ate un­der very safe se­cu­rity sys­tems, but we al­ways need to stay one step ahead”

through a con­stantly chang­ing uni­verse of num­bers which is equal to each of the seven bil­lion peo­ple now liv­ing on earth also be­ing an in­di­vid­ual planet of seven bil­lion”.

Toohey says, when in­te­grated with so­phis­ti­cated pro­pri­etary se­cu­rity in­fra­struc­tures, the BT sys­tem can re­duce the in­creas­ing fake goods traf­fic world­wide.

“This fi rst trial which we have just suc­cess­fully com­pleted is a fi rst step in our de­ter­mi­na­tion to build con­sor­tia and use this cut­ting edge tech­nol­ogy to help bat­tle and de­feat the huge and evil trade in deadly fake medicine that could, if not stopped, kill 10 mil­lion peo­ple over the next 10 years.”

DB Schenker Aus­tralia and New Zealand CEO Ron Koehler says the se­cu­rity of sup­ply chain is not just a T& L con­cern. The im­pli­ca­tions of freight se­cu­rity af­fect busi­nesses, con­sumers and com­mu­ni­ties alike.

Mean­while, DP World Aus­tralia MD and CEO Paul Scur­rah says the trial is a key step in test­ing how the tech­nol­ogy can strengthen the se­cu­rity of cargo.

“We op­er­ate un­der very safe se­cu­rity sys­tems, but we al­ways need to stay one step ahead. We are keen to ex­plore how we can avoid the trench war­fare of cen­tralised data sys­tems with mas­sive hacker at­tacks and equally mas­sive static de­fences, which has char­ac­terised so much of online digi­tised se­cu­rity – up to now.

“DP World Aus­tralia was the fi rst global port op­er­a­tor to sign up to the US Cus­toms Trade Part­ner­ship Against Ter­ror­ism (C-TPAT) and the fi rst to meet in­ter­na­tional ISDO 28000 se­cu­rity stan­dards.

“We are com­mit­ted to ex­plor­ing how blockchain tech­nol­ogy can be in­te­grated with our deeply lay­ered se­cu­rity in­fra­struc­ture: the chal­lenge and op­por­tu­nity is for com­plete trans­parency – to know at any time what is in each con­tainer, pal­ette, car­ton and box – to vir­tu­ally the last grain of mat­ter.”

DIS­RUP­TION OR NEW POS­SI­BIL­I­TIES?

QIC head of global in­fra­struc­ture Ross Is­rael says BT has the po­ten­tial to both dis­rupt and cre­ate more pos­si­bil­i­ties for the fu­ture. Although the ap­pli­ca­tions of blockchain within the in­fra­struc­ture in­dus­try are largely un­ex­plored, Is­rael says this tech­nol­ogy has the po­ten­tial to trans­form global in­fra­struc­ture. Given in­dus­try sup­port and reg­u­la­tory back­ing, it can help boost the effi ciency and rev­enue gen­er­a­tion of trans­port-re­lated pay­ments.

“The op­por­tu­nity is to make things more ef­fi­cient, to have more seam­less pas­sage be­tween pub­lic and pri­vate trans­porta­tion, to bring into play as­sets and that pre­vi­ously were pri­vate which would ac­tu­ally be able to be paid for by more than one user is cer­tainly a great pro­duc­tiv­ity gain in trans­port,” he says.

“The risk of course is that it alien­ates ex­ist­ing as­set own­ers who work against the fa­cil­i­ta­tion of that de­cen­tralised model and ac­tu­ally seek to cen­tralise pay­ment for the ben­e­fit of get­ting a higher re­turn. There­fore there was go­ing to be a sig­nif­i­cant el­e­ment of reg­u­la­tory guid­ance that is go­ing to be re­quired to fa­cil­i­tate blockchain but equally we can see ap­pli­ca­tions which will slowly, as the in­ter­net did, pen­e­trate slowly but surely into the way we do things.”

Be­low: DP World Aus­tralia par­tic­i­pated in a suc­cess­ful global blockchain sea and road sup­ply chain trial that spanned from South Aus­tralia to north-east China

Above: DP World Aus­tralia MD and CEO Paul Scur­rah says DP World is keen to ex­plore tech­nolo­gies that help avoid se­cu­rity breaches and mas­sive hacker at­tacks

Op­po­site: Par­tic­i­pants of the TBSx3 trial be­lieve that blockchain tech­nol­ogy can suc­cess­fully tackle the is­sue of sup­ply chain se­cu­rity

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