dexFreight CEO Sees Blockchain and AI as a Powerful Logistics Combination
Rajat Rajbhandari has worked on logistics and traffic problems as an academic for much of the past two decades.
by James Rubin from ThirtyK.com – see the original post here:https://thirtyk.com/2018/04/27/logistics-blockchain/
For nearly two decades as an academic, Rajat Rajbhandari has focused on solving logistics and traffic problems. But earlier this month Rajbhandari, 44, left his position at the prestigious Texas A&M Transportation Institute to take a more hands-on approach to logistics as one of seven co-founders, and CEO, of DexFreight. The Miami-based company is combining blockchain and artificial intelligence (AI) principles to create a decentralized platform for shippers and other players in the logistics industry. DexFreight is hiring its first developers in the next few weeks and hopes to raise $50 million via crowdfunding and other sources.
“Our goal is to compress workflow using blockchain as a trust protocol and AI as a decision-making tool,” he told ThirtyK. “We will save shippers and freight forwarders money,”
ThirtyK: What were DexFreight’s origins?
Rajbhandari: I met a logistics entrepreneur in Florida at a blockchain event in July 2017. We started putting ideas together about creating this decentralized platform for logistics companies — shippers, freight forwarders and carriers. In January 2018, we raised a friends and family [funding] round to start the Minimum Viable Product. Our better version will be out in November this year. We’re also doing crowdfunding.
ThirtyK: What is your model?
Rajbhandari: The decentralized, logistics platform uses blockchain and AI to improve workflow. Shippers find a good carrier to move their loads and carriers find loads and shipments. The current workflow is complex. There is lots of paperwork. Incentives are not properly aligned. Our goal is to compress workflow using blockchain as a trust protocol and AI as a decision-making tool. We will save shippers and freight forwarders money.
Open Source Platform
ThirtyK: How is your model different from other blockchain/logistics projects?
Rajbhandari: The platform will be open source and access and allow third-party developers to build apps and provide services to that core interaction between shippers and carriers. We wanted as much decentralization as possible. That includes peer-to-peer transactions between shippers and carriers. The transactions are digitally signed. They can use the underlying token for rewards, settlements, escrows. We’re using a dual token model.
ThirtyK: Why did you choose this approach?
Rajbhandari: Our end customers are shippers and carriers. They cannot operate in a volatile environment. If we use a single token and that token gets traded a lot, we fear that shippers and carriers would stop using our platform. U.S. and Canadian shippers and carriers value reputable, technology providers. If we go a traditional ICO route of fundraising and registering in not-so-well-reputed foreign jurisdictions, trust might be a problem. We want to do things the right, legal way, in compliance with the SEC and other regulatory agencies. One token will be traded and the other will be a form of payment. The security token is a representation of security in the company. The other token, the stable token, will be used for escrows, payment, monetizing data and to access third-party value-added services. It works as a reward for companies that perform well, like airline miles.
“Bigger companies see us as a disruptor. No one likes to work with a disruptor”
ThirtyK: What are your specific goals for crowdfunding?
Rajbhandari: Our goal is to raise up to $50 million.
ThirtyK: What gives you confidence that your project will succeed in this increasingly crowded space?
Rajbhandari: Our model is based on the simplicity of finding carriers. The platform will verify carriers by integrating with the Federal Motor Carrier Safety Administration and other agencies. Proof of transactions is maintained in the blockchain. The counterparties do not have to worry about tampered-with transactions. That should reduce disputes, which are expensive.
ThirtyK: You will try to solve the issue of data control, too?
Rajbhandari: You pay a lot to get in current platforms and do not have much control over data. Software providers collect data from users and sell [the information] to third parties. The users do not get the proceeds. Our platform will not own the data, which is a paradigm shift in logistics software.
ThirtyK: What challenges are you facing?
Rajbhandari: In logistics, you need to have a lot of cash. What we’ve seen in the past 10 to 15 years is logistics relies on acquisitions to increase revenue and market value. We fear we may have to do something similar. As a start-up, it’s not easy to acquire another startup. (Also), there’s a huge disparity among companies. You have to market to small companies differently than to a bigger company. You have to demonstrate that the platform will save money. There’s going to be an educational component, and that’s expensive. Bigger companies see us as a disruptor. No one likes to work with a disrupter.
ThirtyK: Your co-founders have been industry executives. You’re an academic. How do you combine your talents?
Rajbhandari: They bring a lot of inside knowledge as to how logistics works and I bring more of a blockchain and AI aspect of it. So that way we synergize well. They are also businessmen. They know how to raise funds. They’ve been able to bring in early partners, early adopters.
Solving Cybersecurity in the Connected World
ThirtyK: Is this company going to work on traffic problems?
Rajbhandari: Probably not directly. (But) one of the things we will do is provide trucks with on-time arrival predictions through AI and third-party services.
ThirtyK: Will blockchain enhance security?
Rajbhandari: If you think 20 years from now, IoT (internet of things) devices, computers running on the road — that’s what all those connected cars and trucks will be — you could have a cybersecurity problem. They’ll be talking to one another, getting data from roadside sensors. It becomes a honey pot for hackers. How do we use blockchain to make a data transmission that’s been happening among cars and roadside infrastructure more resilient? One idea is every time a data transfer happens it can compare the integrity of data on blockchain. If the hash of the transaction has changed, then the data have been tampered with.
ThirtyK: Is there a separate practical application?
Rajbhandari: Imagine ordering a brake pad by itself and being able to transmit money or pay for other services (and products) — fuel, registration. A smart contract could hold the terms and conditions (of a transaction). Now we’re talking about an economically powerful car. That’s where we’re thinking it could go because smart contracts are so easy to put into a computer and future cars will be full of computers.
ThirtyK: Are you excited about becoming an entrepreneur?
Rajbhandari: You can make a lot of impact.