A Conversation with Adrian Challinor

We are in the midst of a fourth industrial revolution, where organizations are preparing for a future where machine learning and automation play key roles in optimizing businesses. This change will impact all industries, but the effects are especially evident in logistics and supply chains.

SEDNA recently spoke with Adrian Challinor, a leader in digital transformation with over twenty years of experience working with companies, such as Marcura and Glencore. We discussed the challenges facing logistics organizations today and dived into the limitations of blockchain. The following is an edited transcript of our conversation with Adrian.

What is the biggest challenge facing logistics?

The biggest issue is the sheer lethargy on logistics when handling claims. Most software companies in shipping believe the challenge is moving cargo from one place to another, but the real issue is the trading of the commodity, it is those who have cargo in one location and want to sell to another. Most software do a poor job of managing this transaction.

Why is this such an issue?

For short voyages, say 2 days, it will take 3 months to settle the simplest of claims due to the complexity of negotiation and volume of information shared (i.e. demurrage, insurance claims, etc.). If a trader is buying his cargo as FOB shipment (responsibility and liability transfer from seller to buyer when the shipment reaches the port) and selling as a CIF agreement, (the seller pays costs and assumes liability until the goods reach the port of destination chosen by the buyer) the PnL (profit/loss) is flat.

Could blockchain solve this problem?

Blockchain is distributed and not central, but even a permissioned blockchain publishes details of trades through the network. This provides too much information to other participants on the blockchain. Trading companies guard their data and will be reluctant to participate in such systems.

What solution do you recommend?

I believe we need to bring straight-through processing (STP) to the combination of trading and shipping. Distributed ledgers will help here. Ultimately, the solution needs to evolve the decision-making and demonstrate a benefit to change by reducing the execution cost.

Where do we start?

Trading houses that are technically savvy with IT support who will work with each other. But beware of any solution that does not integrate with other systems. We need to break the data silo with more software doing smart things.

For more insights like these, be sure to sign up for our Global Executive Thought Leader Panel Webinar – Technical Innovation and Optimizing Transportation and Logistics. We’ll be featuring an in-depth discussion with Mike Powell, Founder of Cardinal Point Marine Ltd, and Dan James, SEDNA’s Head of Product, on the future of the transportation ecosystem. Spots are limited, register today!