White paper: Building the Blockchain Logistics Protocol
2.3 Token Use Cases and Process Flow
OpenPort understands that this is a complex undertaking involving many stakeholders within a dynamic ecosystem, and proposes to introduce new blockchain elements to our current platform in phases and by country – based on market readiness, existing customer base and platform maturity – starting with the Philippines, India and then also Pakistan.
OpenPort already operates a critical element of this ecosystem – our ePOD with Driver App for drivers – which we will leverage to provide identity and 2-factor (2F) consignee authentication on shipments, triggering payment from the escrow account held by the marketplace. We will also further develop the following system elements to complete the platform:
- Utility Token (OPN). The role of OPN is to facilitate the fast transfer of funds between parties with no delay after a shipment is received. OPN will operate on an openly accessible blockchain with a permission layer to secure confidential data.
- Token Exchange.
- Transport Marketplace with Smart Contracts. The already existing marketplace (deployed in Indonesia and Pakistan to start) will include performance ratings and direct procurement operations.
Closing the loop
OPN transfer to transporter links together the ERP integrated smart contract, writing of events to the ledger from pick up to delivery, and the ePOD confirmation and digital signature. Payments between all parties is made on completion of conditions contained in the smart contract, within hours of completed delivery as opposed to weeks if not months of delay in the legacy payment process.
Building an ecosystem that incentivizes transport procurement by OPN will drive cost reduction for shippers and improved cash flow for transporters, as OPN are instantly released by smart contracts to the transporter upon successful ePOD. Transporters will have the option to be paid with an immediate release of OPN upon ePOD which can be converted to fiat currency via the local exchange.
Payment by OPN brings further benefits to the multinational shipper beyond working capital. Transparency will increase, and the possibility for corruption within the procurement process is negated using OPN, as all transaction history and payments are recorded to distributed ledgers accessible by authorized consensus nodes running the logistics protocol.
Furthermore, as a multi-market provider, OpenPort multinational clients who opt to make payments in OPN will benefit from fewer international capital constraints, freeing up the movement of both capital and goods for cross border freight (see interoperability above).
Case Study: Micro-Rewards and Irrefutable Transparency
How to Seed the Market, Solve a Problem and Drive the Value of OPN at the Same Time
Transporters throughout Asia subcontract their services to the owners and operators of ‘market-hired vehicles’. This practice offers the capacity and pricing desired by the high-volume shippers that purchase transport from these providers, but until now there has been no reliable way to track any of these market-hired vehicles during transit, with the truck itself often not confirmed (via brokers) until hours before pick-up, and the identity of the driver subject to change at the last minute.
With the advent of smartphones, we now have a cost effective and ubiquitous tool not only for confirming driver identity, but for gathering a wealth of event-driven data from the truck. We can do this by deploying the free-to-use OpenPort Driver App in conjunction with our ePOD technology. However, usage of this technology needs to be incentivized.
To encourage adoption, OpenPort will reward individual drivers under a micro-reward scheme (estimated at 1% of the transport revenue)
- Phone powered on with GPS enabled during transit
- Delivery and use of ePOD (highest reward)
- Handling exceptions accurately, digital signature for SKU level adjustments
- Confirming availability for new marketplace loads
- Accepting new bookings
Micro-rewards will be paid with OPN, built on the same blockchain as our Driver App and ePOD, and drivers can cash out from the local exchange when they desire. The OPN micro rewards system will extend to supply chain participants (drivers, warehouse operators) other than the company to whom transport is contracted (transporters). This increases transparency, as more supply chain events are made available through the OpenPort platform, but the consensus protocols around the blockchain also improves trust in the accuracy of this data. An irrefutable transparency is created, for extended value to shippers.
Identifying the driver and tracking events in this way is essential to the irrefutability of the ePOD, which is a core KPI for the transporter and triggers payment to the transporter, which will be done significantly quicker than legacy payments (and even faster if the transporter accepts OPN vs. cash), thus creating incentives for both transporter and driver.
Shippers want drivers in the supply chain to use smartphones, but do not want to directly involve themselves in driver incentive programs, which may be practically impossible to execute due to the myriad number of small payments required. Instead, shippers will continue to pay for the freight directly to the transporter via OpenPort and our smart contracts.
The transaction value of these micro-payments (in the one-tenth of USD0.01 range, for example) cannot be easily supported by established cryptocurrencies as their minimum transactions costs would make the process prohibitively expensive to manage. The consensus creation mechanism will be faster on OpenPort’s blockchain. Tracking the driver identity, rewards paid and automatically assigned performance ratings also builds value in the blockchain and OPN exchange.
We can further use OPN to secure capacity on behalf of the shipper While full transfer of OPN is made on completion of the smart contract, an agreed amount can be placed on deposit once a booking is made, securing the transport. Mirroring real business use cases, if the shipper cancels the booking, a percentage of the deposit is transferred to the transporter. This helps to protect both party’s interests.