Blockchain Booking Venture Fails
Hong Kong-based blockchain technology company 300cubits has decided to suspend the operation of the Booking Deposit Module effective from October 1 including the circulation of its tokens named TEUs.
The system started accepting trial shipments in March 2018 and was launched into live production in July 2018 with varying responses.
300cubits is recognized as the one of the first to apply blockchain technologies in shipping. The TEU tokens created by 300cubits are still one of the more recognized digital assets in maritime space.
When using the system, both carriers and shippers were careful about their commitment, says the company. Nearly all except one shipment where booking deposits were placed were executed according to the booking. However, the transaction volume through the system have been far from commercial. Only a couple hundred containers have gone through the system, which, although may seems plenty among the shipping blockchain projects, is not sufficient to keep the system going commercially.
The lack of clarity in regulatory regimes surrounding digital currencies has proved to be the greatest hurdle in the 300cubits’ marketing efforts. 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 11th hour due to regulatory concerns.
300cubits has also learned that shippers face bigger booking pain point than rolling, 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 are still within contract commitment.
Moreover, the lack of liquidity for the TEU tokens and the volatilty of all cryptocurrencies in general also cast a constant doubt among the users on whether the value of the tokens could be realized.
From 300cubits’ experience, many of the core blockchain features e.g. immutability and anonymity are either not intuitive or unappealing to the business users. And blockchain systems almost have to work interoperatably with central server based systems in the commercial applications; business users are comfortable with the server based systems.
With the system being suspended, 300cubits will burn at least 75 percent 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.
The company said in a statement: “The positives are that the system has had participation from the largest shipping liners e.g. Sealand of Maersk Group, CMA CGM, MSC and Cosco, while the 300cubits have gone the length in its discussions with the rest of the top 10 container liners about running trial shipments on the system. More than a dozen shippers e.g. Li&Fung Logistics, BASF, JF Hillebrand, Esprit, Mitsui Chemical, REWE etc have tried the system. In addition to those who have actually used the system, over 100 shippers have registered in the system to get their allocation of TEU tokens while many more shippers have contacted 300cubits and showed interests in 300cubits’ solutions.”