A Hong Kong-based startup company 300cubits, which centers around developing Ethereum blockchain technology for shipping, recently announced that it has completed its first trial shipment via a smart contract technology.
How Does TEU Token Work?
The trial uses “TEU” tokens to facilitate shipping transactions and has been referred to as the bitcoin of the shipping industry.
The principle behind this technology is straightforward. If, for instance, both the shipping liner and the customer agree to ship a good, they enter into an agreement where they deposit a fixed TEU token amount.
Hence, if the customer does not show up with a cargo for confirmed bookings or a carrier does not load the shipment, then the party that defaults loses its deposit while the other gets all the deposited token to cover any losses.
However, if they both fulfill their part of the agreement, then both parties receive their deposit at the end of the operation.
300cubits co-founder Jonathan Lee hopes that the introduction of TEU tokens will solve the problem of carrier overbooking and no-shows, which results in unnecessary costs worth up to $23 billion yearly.
These TEU transactions are conducted via the Ethereum blockchain platform and can be viewed by the public in the Etherscan portal, creating transparency.
The Shipping Industry Embraces TEU Token
Brazilian textile importer LPR also participated in this trial by using TEU tokens to reserve space for two 40-foot shipping containers on a vessel operated by Malaysian liner West Port.
This process was completed with the involvement of both the shipper and liner depositing TEU tokens on March 9, 2018. Subsequently, the deposit was returned to both parties on March 15, 2018, upon the successful completion of the shipment.
CEO of LPR Felipe Bittencourt said in a statement that :
“It was a pleasure to be the first in the world to participate in this trial, for a technology that will change the way ocean shipments are done around the world.”
Twenty freight forwarders and other stakeholders in the shipping industry have already signed up to begin trialing the system, and 300cubits expects the booking deposit system to fully launch by June 15, 2018.
Over 40 percent of TEU tokens will be distributed during the upcoming crowd sales scheduled for August 16, and September 20, 2018. A small percentage of TEUs will initially be given free to a few of its clients and their customers to encourage the adoption of the tokens. On the other hand, six percent will be allocated to its founding members.
In addition, the tokens will be accessible on significant cryptocurrency exchanges enabling investors to buy and sell TEUs globally.
According to 300cubits, it is expected that TEU tokens would become a defacto payment system in the shipping industry thus reducing the need for dollar cash payments. In a statement from the fintech firm, they described their principal mission:
“We believe the TEU tokens are what the industry needs to ensure shipment agreements get honored, use crowd wisdom for more accurate forecasts or hedge against the unpredictable cyclicality.”