In 2019, NASA funded a project to sow the seeds for an all-electric aircraft platform that it hoped would put commercial aviation on a more sustainable flight path. At the time, analysts were forecasting that air travel was on track to increase by 90% in the US over the next 20 years. And the aviation industry’s contribution to global emissions – based on Boston Consulting Group analysis – could balloon from single-digit percentages up to as much as 20% by 2050. Sustainable aviation needed some bright ideas.

What’s the flight path to sustainable aviation?

Four years later, the USD $6 million NASA project – dubbed CHEETA, reflecting how its members form a Center for Cryogenic High-Efficiency Electrical Technologies for Aircraft – has cleared the bar set by phase one’s concept stage. And it’s now time for the partners – which include nine academic institutions, Boeing, GE, and the Air Force Research Lab, all based in the US – to develop prototypes of their designs.

At the core of CHEETA’s sustainable aviation plan is the use of cryogenic hydrogen. “Because hydrogen takes up a lot of volume, it’s best kept cold in a liquid state,” said Phillip Ansell, lead researcher on the NASA program and director of the new Center for Sustainable Aviation at the University of Illinois Urbana-Champaign. “Instead of thinking of that as a barrier, we saw it as an opportunity to leverage those unique characteristics.”

READ NEXT

Circuits of life – what can tech learn from nature?

Superconductivity at room temperature has had a rough ride recently, but the approach, which reduces the energy losses in electric circuits, already has an industrial track record at low temperatures. “We saw a great deal of promise in using the 20 Kelvin cryogenic temperature of liquid hydrogen to enable the use of superconducting technology,” Ansell goes on to explain.

And it’s not just organizations in the US that seem keen on this idea. European aviation giant Airbus is also looking to combine liquid hydrogen and the efficiency gains of superconducting low-temperature circuits. Airbus announced a three-year demonstrator program (ASCEND) in 2021, which has the goal of increasing power density in the propulsion chain while keeping the mass of the distribution system low.

The power and stored energy requirements of air travel, particularly over long-haul routes, make sustainable aviation a tough problem to solve. If you plot the maximum power versus stored energy requirements of different modes of transport on a graph, EVs such as the Tesla Model S and Toyota’s Prius would be on the bottom left – with parameters that can be achieved using batteries.

However, wide-bodied airliners such as the Airbus A380 – which need to carry large numbers of passengers to make the economics of flying add up – are all the way up on the top right. Sustainable aviation needs to address both the need for large amounts of power for take-off and cope with the large distances currently traveled without refueling.

CHEETA still has to prove itself on the scale of a commercial airliner, but the design concept – which uses hydrogen-fed electricity-generating fuel cells to power electric rotors – is off to a promising start. “We were able to reduce the electrical system losses to below 2 percent, so the whole system is over 98 percent efficient from the output of the fuel cell to turning the rotor of the electric machine,” Ansell reports.

READ NEXT

Supply chain tech stack: can CPUs, GPUs, and sails clean up shipping?

There’s a raft of projects globally looking at hydrogen as a replacement for jet fuel. Hydrogen burns without the carbon emissions of current jet fuel, and produces just water as a product of combustion. But it’s a very small molecule that’s difficult to contain, and critics may point to how fuel cells in vehicles have been slow to take off.

That being said, there are multiple reasons to believe that sustainable aviation based on hydrogen will succeed despite the struggles experienced in the automotive sector. As mentioned, power density and energy storage requirements make it hard to see how batteries will suit all but the smallest of aircraft, making hydrogen-powered fuel cells a more compelling prospect in aerospace.

And the number of refueling stations required are orders of magnitude less than for road transport. There are in the region of 100,000 gas stations for vehicles in the US, which would be a massive infrastructure challenge for hydrogen. However, considering major airports, you only have around 100 facilities to focus on.

Plus, as reported on by TechHQ, airports can use ground vehicles as a pathfinder for building out hydrogen refueling operations. The area around Toulouse in France, which includes a major Airbus manufacturing facility, has a pilot-scale hydrolyser to supply airport buses. And the longer-term plan is to scale this up to provide green fuel for light aircraft.

@LanzaTech have begun their pre-application consultation on their plans to develop a Sustainable Aviation Fuel (#SAF) facility in Port Talbot.

Find out more about the project and share your views here: https://t.co/bsOrdLCT4u pic.twitter.com/iN5IecMnz8

— Neath Port Talbot Council (@NPTCouncil) August 15, 2023

The global pandemic hit the aviation industry hard, but it is now bouncing back in a leaner and more fuel-efficient form. Older planes were retired as part of cost-cutting during Covid. And the industry has long been adept at making marginal gains on performance that have dampened its emissions despite rising numbers of passengers. But it won’t be able to decouple emissions from a boom in air travel without ditching fossil fuels for good.

There are lots of good news stories about sustainable aviation fuel (SAF), which can even be made from food waste, and gives airlines a drop-in replacement. But the use of SAF by airlines globally is currently tiny, and it’s not a zero-emission solution. SAF is said by the International Air Transport Association to reduce CO2 emissions by 80%, as the CO2 absorbed by plants is recycled – for example, when SAF is derived from biomass.

Also, there’s a chicken and egg problem of aviation customers not wanting to pay high prices, but SAF suppliers needing to have a larger market to bring down costs. Given the relatively quick win that SAF offers, it feels likely that biofuels will provide some form of bridge until new technologies, such as those being pursued by CHEETA and other projects, are commercialized.

China, India, and growth in SAF

Experts point to the feasibility of China and India becoming major suppliers of SAF, as the demand for airline travel is expected to grow dramatically in both countries. Producing SAF could utilize concentrations of municipal waste and agricultural residues, as well as creating jobs and driving economic growth.

Considering China, the country is a global force in renewable energy, and producing biofuels to support a path towards sustainable aviation – as well as bolstering energy security – would be a logical move.

What’s also clear is how demand for aviation has weathered developments in communications. Video conferencing capabilities have never been as accomplished as they are today, yet business travel – a profitable revenue stream for airlines – has rebounded. And researchers have shown that the appetite for travel has remained strong over the past 200 years despite the various breakthroughs in communication, such as growth of the postal service, fax machines, and the internet.

This appetite for travel gives confidence to developers of sustainable aviation that passengers will be ready and waiting for future net-zero flights, which cannot come soon enough for the planet.

The post Sustainable aviation: NASA ups bet on liquid hydrogen appeared first on TechHQ.

America, Japan and South Korea are bunking together – it isn’t summer without camp!

Officials say leaders from the United States, Japan and South Korea are meeting at Camp David to launch new defense steps. The three countries will launch a series of joint initiatives on technology and defense this Friday.

US officials, speaking to Reuters on condition of anonymity, said the summit will see the three leaders agree to a mutual understanding about regional responsibilities amid mounting shared concerns about China.

US President Joe Biden will host at his presidential retreat. Photo: AFP.

A three-way hotline will be set up to communicate in times of crisis, but the summit is unlikely to produce a formal security arrangement that commits the nations to each other’s defense.

US President Joe Biden invited Japanese Prime Minister Fumio Kishida and South Korean President Yoon Suk Yeol, to the storied presidential retreat in Maryland’s Catoctin Mountains.

Camp David’s a little better than cabins in the woods. dapd via AP, FILE

For the two Asian nations, the trip will be part of their work to mend tattered diplomatic relations in the face of a greater regional threat posed by both China’s rise and North Korea. US officials hope this will be the first of many meetings, to become an annual gathering between the three leaders.

The summit on Friday will also see the three leaders signal deeper cooperation in areas including cybersecurity and supply chain resilience.

In March this year, South Korea and Japan held their first summit in 12 years. The meeting this week will mark another step towards easing tensions between the two states after years of dispute.

Photo via Reuters.

Washington has formal collective defense arrangements in place with Tokyo and Seoul separately, but wants the two countries to work more closely with one another in the face of China’s mounting power.

“We are anticipating some steps that will bring us closer together in the security realm,” said one of the U.S. officials, and that doing so would “add to our collective security.”

But the U.S. official added that, “it’s too much to ask – it’s a bridge too far – to fully expect a three-way security framework among each of us. However, we are taking steps whereby each of the countries understand responsibilities with respect to regional security, and we are advancing new areas of coordination and ballistic missile defense, again technology, that will be perceived as very substantial.”

It’s likely that a joint statement between the three countries will come out of the summit. It will include language speaking to concerns about China’s desire to change the status of Taiwan, which it claims as its own territory.

Taiwan’s TSMC powers the chip industry. © Illustration by Michael Tsang via Financial Times.

The language used will have to be consistent with previous US positions on the subject, avoiding an escalation in rhetoric that would undermine efforts to ease tensions ahead of potential talks between Biden and Chinese President Xi Jinping.

Christopher Johnstone, a former Biden White House official now with Washington’s Center for Strategic and International Studies think tank, told Reuters he expected a summit statement recognizing that the security of the three countries is linked, “and that some measure of threat to one is a threat to all,” even if this would fall short of NATO’s Article 5 language, that sees an attack on one as an attack on all.

All of this comes after a collaboration between the Chinese and Russian militaries that unsettled the US.

YOU MIGHT LIKE

CHINA

US-China trade war: New executive order, same old mistakes?

The South China Morning Post reports that China is on “high alert” as Biden hosts – building what some have called a “de facto Asian Nato.”

Some are saying that, given the integration of the Asian countries’ economies with China, they have no intention of picking sides between Beijing and Washington.

For the Japanese government, the alliance with the U.S. is an easy tool for concrete interests, and a condition in exchange for Washington’s support on international issues.

Of course, all of this is happening amidst the silicon blockade imposed on China by America. Beyond maintaining US primacy in the tech world, the effects will cut into Chinese military advancements, and threaten its economic growth and scientific leadership.

As a result, China is working hard to develop its own domestic semiconductor industry, leading to increased competition and vulnerabilities in the software supply chain, too.

This could result in increased attacks on the U.S. supply chain and attempts to gain access to U.S. suppliers’ networks and facilities to both exfiltrate intellectual property and introduce malicious code or components into the supply chain.

“Another potential risk is that this increased competition could lead to the fragmentation (or Balkanization) of the global cybersecurity ecosystem, with different regions using different standards and technologies,” said Ted Miracco, CEO at Approov.

It’s likely that the closeness between the US, Japan and South Korea will include moves to universalize their technological aims and defenses to avoid any such fragmentation. Until a statement from the three leaders, all anyone can do is watch and wait.

The post Camp David will host diplomatic meeting on China defense plan appeared first on TechHQ.

• Price increases feel inevitable as Asian manufacturers raise wages.
• The price rises will correspond to Gen Z demands in Asian factories.
• The prices of consumer goods have been minimized by very low wages.

Price increases on items manufactured in Asia are coming to a toy store near you!

Americans have grown used to a wide range of products being available at (relatively) cheap prices, including clothes, electronics, furniture, and toys. The rise in online sellers from China have only reinforced this snese of continual availability at inexpensive prices.

The issue with this model of relative cheapness is that for all of those things to be so affordable, they have to be manufactured at an even lower cost. For years, that’s meant that stores in America have lined their shelves with items made in factories in Asia.

READ NEXT

Who should set children’s screen time limits?

For the past couple of decades, cheaper overseas manufacturing costs in Asian countries like China have kept prices low in the US and Europe.

However, the younger generation in Asia don’t want to be factory workers. So, factories need to represent better prospects; manufacturers are raising wages and offering other perks.

The average age of factory workers in Asia has gone up. Source: EPA-EFE via South China Morning Post.

Yoga classes, better cafeteria food, and subsidized kindergarten for workers’ children are all good news for Asian factory workers. They will all also inevitably drive up the cost of manufacturing. To offset that, there have to be price increases in retail.

Price increases a result of staff shortages

The rising costs in factories haven’t come out of nowhere: in China, manufacturing workers’ wages have more than tripled in the last ten years. Japan, Vietnam and Malaysia have also seen notable bumps.

“For US consumers that have been used to having goods at a certain and relatively stable part of their disposable income, I think that foundation is going to have to be rejigged,” Manoj Pradhan, a London-based economist, told the Journal.

It’s hard to feel that much sympathy for Westerners who will be upset about price increases when those increases will represent fairer employment practices in Asia.

The labor shortage in Asia’s factories is attributed to several factors. Firstly, young workers are pushing back on working conditions, while others hold out for higher-paying jobs in line with their education levels.

YOU MIGHT LIKE

SUPPLY CHAIN

Worker shortages may see forced labor spike in tech supply chains

“After a while, that work makes your mind numb. I couldn’t stand the repetition,” former Chinese factory worker Julian Zhu told VOA News last November.

Even though many factories are in need of workers, unemployment rates among China’s 16-24-year-olds hit 21% last quarter. In 2001, Nike’s typical Asian factory worker was 22. Today, the company’s average Chinese worker is 40, and in Vietnam the standard age has reached 31 years old.

As an effect, price increases have already begun. Companies like Nike, as well as toymakers Hasbro and Mattel have attributed price hikes to elevated labor costs in Asia.

The pandemic and Russia’s invasion of Ukraine caused supply chain trouble that made businesses consider how far their products had to travel before going on sale. The broader decoupling between the US and China, dating back to the trade wars of the Trump administration, hasn’t helped, either.

What can be done about price increases?

Some companies might move operations from Asia onto home soil. This would have the advantage of creating American jobs, and of improving supply chain resiliency – but it isn’t going to stop price increases.

And before we roll our eyes at Asia’s Gen Z workers, asking their employers for more money, better conditions, and better prospects than their mothers’ and their grandmothers’ generations, it’s worth considering how much an American manufacturer pays its staff.

Even given the absurdly low wages of most American factory workers, products are always more expensive when they’re Made in America due to relative living standards.

The Asian economies remain a production juggernaut…but…

Late in 2022, Apple, Walmart, Intel and Lockheed Martin were among corporations that were reported to be taking steps to “reshore” or “onshore” their supply chains. The moves caused warnings about the inflationary implications of a Made in America economy: in November 2022, a Goldman Sachs report said that among the efforts made by US companies to improve supply chains, “reshoring poses the risk of boosting prices.”

YOU MIGHT LIKE

APPLE

Is Apple bringing more manufacturing into Thailand?

Ynon Kreiz, CEO of Mattel IRL. Source: CNN.

Another option is “nearshoring.” Companies including Mattel are shifting supply cahins to countries closer to the US: in 2019, the company closed two of its Asian factories and spent US$50 million on the expansion of an existing plant in Mexico.

Will Ferrell as Mattel CEO in the Barbie movie.

According to Mattel’s Latin America managing director, Gabriel Galvan, “being able to have product close to your consumer and not having to transport it from Asia, that’s going to be more profitable and more competitive when you take costs into account.”

Mexico offers cheaper labor than the US and lower shipping costs than Asia. Whether that’s enough to offset price increases remains to be seen.

Barbie is a revolutionary movie. But real-world economic and personal aspirations in Asian manufacturing mean This Barbie could cost Americans more money, sooner rather than later. Maybe put the Dream House on hold…

The post This Barbie was made in the USA – or nearby appeared first on TechHQ.

• Young workers in manufacturing hubs disenchanted with factory work.
• Labor shortage exacerbates issues of forced labor in tech supply chains.
• Companies not doing enough to eliminate exploitative labor practises.

If you are a business owner looking to cut costs at the expense of your lower-level workers, you might be fresh out of luck. Young workers in China and other Asian countries with significant manufacturing presence are, strangely, becoming disenchanted with the idea of relentless factory work.

The grueling hours, low wages, and intense physical demands have slowly contributed to what is now a significant labor shortage. A report from CIIC Consulting found that more than 80 percent of Chinese manufacturers faced staff shortages equivalent to 10 to 30 percent of their workforce in 2022.

Putting the specter of forced labor to bed

It has been 30 years since China, Vietnam, Malaysia, Thailand, and Indonesia first emerged as global manufacturing hubs, thanks to a combination of factors that propelled their rapid industrialization and economic growth. These include favorable geographic locations that provided access to key international markets, abundant labor forces capable of supporting various stages of production, and strategic government policies that encouraged foreign investment and technology transfer. ‘Made in China’ became synonymous with innovation, efficiency, and cost-effectiveness. I

n recent years, discovers of forced-labor and child labor clouded the reputation of large technology companies, but there have been concerted efforts to clean up electronic manufacture’s supply chains.

These countries’ positions as manufacturing titans have remained that way for many years, but something has shifted. The young people that bosses relied upon to handle the strenuous manual tasks now have smartphones, connecting them with the wider world and allowing them to see a better life for themselves.

Employees work in a factory that produces LED lights for export in Jiujiang, China. Research predicts that digital worker shortage will reach 5.5 million people in the country by 2025. Source: AFP

Social media apps like TikTok have given them greater exposure to alternative working lifestyles and, as a result, high aspirations for themselves. They are seeking out employment outside of factory walls which is less physically demanding, has better working conditions, offers higher salaries, and provides more opportunities for development.

They join the service sector, start their own businesses, learn new skills in areas they are passionate about, or pursuit higher education to increase their prospects. Even skilled engineers are turning to well-paying roles in IT rather than working on factory machines.

In China, these children of the one-child policy era are viewed as ‘spoiled’ for turning their backs on the blue-collar jobs their parents worked to turn the country into a manufacturing powerhouse. In fact, these smaller family units have resulted in the new generation having less economic pressure to compromise wages and working conditions for job security.

In India, workers are migrating from factories to farms to take advantage of the government welfare schemes, with agriculture seeing an estimated 4.5 million increase in employment between 2021 and 2022.

YOU MIGHT LIKE

SUPPLY CHAIN

Global chain supply issues not going away in 2022

‘Google-ifying’ factories

To try and prevent their young workforce from slipping through their fingers, factory bosses have had to dig deeper into their pockets.

Wages in the sector have more than doubled over the last decade in both China and Vietnam. They are also providing more benefits like childcare, subsidized food, free yoga classes, and go-karting team-building events, as well as modernizing their factories with larger windows and open partitions, according to the WSJ. Many large corporations, like Nike, Hasbro, and Mattel, have reported rising costs due to the labor shortage.

But proper working conditions for these young people are not up for negotiation – if they can’t find something appropriate, they would rather do nothing at all. China’s youth unemployment rate hit a record high of 21.3 percent in June, according to the country’s National Bureau of Statistics, as, excluding the manufacturing sector, the job market is scarce.

Factories for garment manufacturers, like UnAvailable in Vietnam (pictured), are modernizing by introducing open partitions, cafes, and free yoga classes to attract younger workers.  Source: UnAvailable

Forced labor, child workers and poor practise

Thanks to the defiance of the youth, China will face a shortage of 30 million manufacturing workers by 2025, according to its Ministry of Education. A large chunk of this will affect the smart manufacturing sector, as a report from Deloitte China and Renrui Talents predicts that the digital worker shortage will reach 5.5 million by that same year.

But there is a dark underbelly to this industry. Instead of tempting new recruits with benefits, there have been reports of forced labor throughout the electronics supply chain, from the mining of raw materials to production. Individuals, including children, work for long hours and low pay in dangerous conditions, and find themselves unable to leave due to threats or violence from their superiors.

Countries that dominate in electronics manufacturing, like China, Malaysia, Thailand, and Taiwan, often have weaker labor laws and don’t enforce them strongly. In 2019, the Migrant Workers Rights Network and Electronics Watch exposed Cal-Comp Electronics – a supplier to HP based in Thailand – for charging Burmese migrant workers an average of $660 each in recruitment fees – six times the legal limit in Myanmar. Factories in China specifically are known to rely on Uyghur state-forced laborers.

An artisanal miner holds a cobalt stone at the Shabara artisanal mine near Kolwezi, Democratic Republic of the Congo. The metal is used in the rechargeable batteries that power mobile phones and electric cars. Artsinal mining in the country is associated with child labor, dangerous working conditions, and corruption. Source: AFP

Tightening the purse strings

The problem has only been exacerbated over the last year. Along with labor shortages, electronics manufacturers are struggling with supply chain issues, and inflated energy & raw materials prices associated with Russia’s invasion of Ukraine.

There are also rising geopolitical tensions between China – where the electronics industry was valued at $350 billion in 2020 – and the West, particularly the US. Furthermore, business has yet to fully recover from the dip in profits when the demand for gadgets dropped dramatically post-COVID.

Tech giants like Google, Apple, and Sony are shifting production to other countries, including India, Vietnam, Malaysia, Thailand, Taiwan, and The Philippines, which have lower labor costs and a higher risk of forced labor. Leopards rarely change their spots, it seems. In May, the human rights group Walk Free released its annual Global Slavery Index which found that G20 countries spent the most on electronics out of all the imported products at risk of being produced with modern slavery, with a total of $243.6 billion.

The amount spent by G20 countries on products at risk of being produced with modern slavery. Source: Walk Free/Global Slavery Index

Ending forced labor

The key to tackling the issues of forced labor is supply chain transparency, but achieving this is not a simple endeavor for tech companies. This is because the elements that make up semiconductors and other intermediate components change hands up to hundreds of times before reaching the distributing company.

However, new legislation and import bans are making it harder to get away with this ignorance. For example, the Uyghur Forced Labor Prevention Act requires US companies importing goods from China’s Xinjiang Uyghur region to prove that forced labor was not involved in their production.

Some corporations take individual responsibility for their supply chains by conducting audits and inspections of suppliers, working with suppliers to improve working conditions, and investing in traceability technologies that enable them to track the journey of raw materials and components.

Hewlett Packard Enterprises came first in the Information and Communications Technology Benchmark of 2022 from KnowTheChain. It is consistently ranked highly in the annual lists, thanks to strong practises in responsible recruitment and human rights risk assessment. They are also leaders in robust policy implementation, prevention of abuse, and improved outcomes for workers who raise grievances.

Many leading tech giants, including Amazon, BT, Microsoft, and Salesforce, have joined the Tech Against Trafficking coalition. This group is working alongside experts to develop technological solutions that will help eradicate human trafficking and modern slavery. These include leveraging advanced data analytics to identify patterns of trafficking, developing AI-powered tools to detect online platforms used for illegal activities, and creating secure communication channels for survivors to seek help and support.

The median score of all the 60 companies analyzed for the KnowTheChain benchmarking report, which represents their efforts to address supply chain forced labor, was just 14 out of 100. Source: Shutterstock

However, the median score of all the 60 companies analyzed for the KnowTheChain benchmarking report, which represents their efforts to address supply chain forced labor, was just 14 out of 100.

According to the authors, this reveals “abject failure by most to demonstrate sufficient due diligence to identify forced labor risks and impacts in their supply chains, or take adequate steps to address them”. At the same time, the efforts of Hewlett-Packard and other front-runners prove it is possible to do so while remaining profitable.

Indeed, the rise of automation in all industries will likely make the need for such due diligence even more stark. The 2018 Human Rights Outlook highlighted how machines conducting routine tasks will only work to drive down labor costs, resulting in workers in developing countries competing for fewer jobs at lower wages.

The UN’s International Labor Organization estimates that 56 percent of manufacturing workers in Cambodia, Indonesia, Thailand, The Philippines, and Vietnam will have lost their jobs to automation by 2040.

Áine Clarke, Head of KnowTheChain and Investor Strategy, Business & Human Rights Resource Centre, told TechHQ: “Rising geopolitical tensions and global events, such as the cost-of-living crisis, climate change and growing inequality, are causing supply chain vulnerability, leading some companies to shift sourcing to contexts in which they have less visibility. 

“China’s ‘zero-Covid’ strategy – which created labor shortages and unreliable production outputs – and its trade war with the US saw some tech companies, such as Apple and Nintendo, shifting production away from China to countries such as India, Malaysia, Thailand and Vietnam.

“Decisions to re-shore are often commercially-driven with a lack of due diligence on the labor rights risks in new jurisdictions.

“The resulting lack of understanding of, and visibility over, working conditions, labor laws or civic freedoms afforded to citizens in the chosen countries can put workers at an increased risk of labor exploitation and forced labor.

“In India, labor laws were weakened to reboot the economy in the wake of the pandemic, while freedom of association and collective bargaining rights continue to be eroded globally.

“The impact on workers has been significant, ranging from health and safety issues, restricted hours and income, dismissal, non-payment of wages and restriction of movement.

“There is a significant gap between policy and practice when it comes to addressing forced labor risks in the ICT sector.

“Although a number of companies have human rights commitments, most have failed to consider how their purchasing practices are exacerbating forced labor risks within their supply chains, raising serious concerns about due diligence approaches across the sector.” 

The post Worker shortages may see forced labor spike in tech supply chains appeared first on TechHQ.

Operating systems have a huge bearing on our relationship with technology and appeal to personal preferences – for example, try getting Linux, Mac, and MS Windows users to swap machines! And one of the most significant operating systems in our daily lives is a platform type that many of us never consider – the terminal operating system, which is critical to transporting goods efficiently around the world.

Experience goes a long way when it comes to implementing a terminal operating system that’s going to achieve its full potential. And, as customers soon discover, one size doesn’t fit all. The selection process begins with the nature of the shipping terminal as break bulk – goods such as steel, lumber, and agricultural products, which are not shipped in containers – processes deviate from general cargo operations.

READ NEXT

Supply chain tech stack: can CPUs, GPUs, and sails clean up shipping?

David Trueman, MD of TBA Group, points out that container processing involves standard dimensions – so much so that operations can run efficiently with little knowledge of what’s inside. Container terminals also benefit from a standardized format of electronic data interchange (EDI) and suit optical character recognition – with agreement on the type and position of container numbers.

However, break bulk cargo comes in various shapes and sizes. Plus, it’s vital to know the nature of the goods to manage unloading, warehousing, and transport. And cargo identification markings are more varied, both in design and location.

“It’s really important to understand where the data sources are going to be,” Trueman responds, when asked about the single most important thing to consider in the design of a bulk handling terminal operating system. “Where are you going to get your real-time information? The location of weighbridges in the operational workflow is vital.”

What is a terminal operating system?

One way of picturing terminal operating systems is to think of them as an enterprise resource planning solution (ERP) for port operators. The systems are essential for optimizing labor allocation and equipment usage and managing the way that port areas are utilized. And Thetius, a maritime technology analyst firm, estimates that the terminal operating system market is currently worth over half a billion dollars.

Day 20 of the #30DayMapChallenge – My Favourite. I think it is the prettiest visualisation I have and indeed, will ever make!
Made with #Python using #matplotlib and #Numpy. #DataScience #DataVisualization #Map #shipping #Geography #dataviz #data #DataScientist pic.twitter.com/8iZiCfib62

— Python Maps (@PythonMaps) November 20, 2022

Features offered by vendors include fleet management, autogate systems, and video analytics. Terminal operating systems can build off industrial IoT frameworks to gather even more data on real-time operations – which expands the possibilities for machine learning and AI. And modules can service billing and other related activities to streamline business operations.

Also, given that vessel plans involve multiple parties, including the next port of call, collaboration is key. And terminal operating systems can help to manage that complex process, carry out better planning, and compile all of the necessary information into the right format, noting EDI requirements.

List of TOS vendors

• Contpark
• CyberLogitec (OPUS Terminal)
• DP World (CARGOES)
• Envision
• GullsEye
• Hogia
• Inform
• iPortman
• IT Partner
• Kaleris (Navis)
• MarineBerth
• Orbita TMEIC
• TBA Group
• TGI
• Tideworks (Mainsail)

Clearly, the world is becoming more automated. And port terminals are no exception from discharging and loading machinery handling vessels at the berth area to yard operations and gate management.

It’s commonplace – for example, in giant terminals such as the Port of Long Beach in the US (the country’s first fully automated port) or the Port of Rotterdam (Europe’s largest seaport) – to see self-driving container trucks (terminal tractors) shuttling back and forth. And reports suggest that smart ports brimming with IoT sensors could accommodate autonomous ships by 2030.

China too has been busy automating its port facilities, including Qingdao – a major seaport in the east of the country and one of the top 10 in the world based on traffic. Qingdao harbor has four zones, which handle cargo and container goods, including oil and petrol tankers, as well as vessels carrying iron ore.

Logical upgrade to supply chain planning

The scale of traffic, diversity of goods, and multiple modes of transport, including road and rail freight, highlight the demands that terminal operating systems have to meet. And getting to grips with this complexity helps to explain why ports are becoming a magnet for the latest technology.

On TechHQ we’ve written about how quantum computers are being used to plan the loading of trucks to reduce the distance traveled by RTG cranes and dramatically reduce maintenance and operating costs.

Private 5G networks are also helping to boost the efficiency of shipping terminals where mobile coverage may otherwise be patchy and feature dead spots. And there are gains beyond connectivity, as operators benefit from being fully in control of communications.

READ NEXT

China renewable energy calculations sum up carbon neutrality goal

Having a terminal operating system to measure and record port activity gives management a dashboard view on whether operations are achieving their key performance indicators (KPIs). And, particularly if KPIs are not being met, analysts can dive in – aided by data insights – and identify where the bottlenecks are.

Systems also provide a suite of reporting tools – for example, showing terminal inventory, gate movements, vessel movements, crane productivity, truck turnaround time, and much more.

The scale of modern freight shipping is mind-blowing. If you put all of the containers from a large category vessel onto a freight train – that freight train would be over 70 miles long.

And, typically, all of that cargo will be unloaded and replaced with waiting goods in less than 48 hours, which is a tribute to numerous advances, including developments in terminal operating systems.

The post Supply chain planning – the importance of terminal operating systems appeared first on TechHQ.

• Future India-Japan semiconductors trade agreed.
• The collaboration is part of a plan to reach $35.9 billion Japanese investment in India by 2027.

Semiconductors and resilient supply chains are a key point of interest in India’s plan to reach $35.9 billion Japanese investment in the country by 2027, according to officials.

During a two-day visit to New Delhi in July, Foreign Ministers of India and Japan, S. Jaishankar and Yoshimasa Hayashi, met in the Indian capital to explore deepening technology and defence equipment collaboration. Both emphasised “the crucial role of a strong partnership between India and Japan in ensuring an open and prosperous Indo-Pacific region that is inclusive and rules-based”, according to a statement by India’s External Affairs Ministry. The two countries share strong economic ties: trade between India and Japan reached $20.57 billion in fiscal year 2021-2022.

On July 21, India and Japan signed a memorandum of understanding (MoU) on semiconductor development. Information Technology Minister Ashwini Vaishnaw described the agreement as a substantial step in creating a resilient and complete value chain.

Resilince for semiconductors’ manufacture in India

“The MoU is on five fronts, viz. semiconductor design, manufacturing, equipment research, talent development, and bringing resilience to the semiconductor supply chain,” said Vaishnaw.

Semiconductors are materials used in electrical circuits and components that partially conduct electricity. Usually comprised of silicon, they conduct less electricity than a conductor (e.g. copper) and more than an insulator (e.g. glass). Semiconductors can be found in a huge variety of products, from computers and smartphones to medical equipment. Their properties and conductivity can be altered by a process called doping, which introduces impurities to the material so that it can meet the needs of different electrical products. Because of this, semiconductor devices have a large range of useful applications, and are widely used across almost all industries.

YOU MIGHT LIKE

INDIA

Exactly what’s going on with Foxconn in India?

Chip manufacturing can generate huge profits when times are good, but the industry is also notoriously cyclical. In 2022, for example, worldwide sales reached a record $574.1 billion, but the industry experienced a significant downturn in the second half of the year. Demand for chips is generally consistent with market demand for personal computers and other electronic equipment, so while manufacturers often struggle to meet high demand when things are going well, periods of lower demand can have a significant detrimental impact. If we look at long-term trends, however, the semiconductor industry has displayed consistent growth over the last two decades. This can be partly explained by a shift in the customer base, given that retail PCs and hard drives are no longer the primary market for semiconductors. Corporate spending on chips has increased as technology has increasingly permeated our everyday lives.

India’s semiconductors prioritized

India is therefore prioritizing chip manufacturing for two reasons. Firstly, India is a major consumer of electronics, and currently spends around $24 billion annually on importing semiconductors. This is expected to rise to USD$110 billion by 2030. This heavy reliance on imports became particularly troublesome during the pandemic, which caused significant supply disruptions. Geopolitical conflicts such as the Russia-Ukraine war have also led to disruptions in the supply chain. Secondly, the Indian government has identified electronics manufacturing as a strategic economic sector. By developing a self-sufficient domestic industry, the government hopes to both meet the country’s domestic needs and to promote economic growth. Financial incentives of up to 50% of total project costs form part of a $10 billion government plan for semiconductor and display manufacturing projects.

YOU MIGHT LIKE

MANUFACTURING

Japan revamps its semiconductor strategy

This is not the first time India has tried to establish a strong domestic semiconductor industry. Efforts go as far back as 2006, when the Andhra Pradesh government partnered with SemIndia to establish a $3 billion manufacturing facility. The project never materialized, and despite multiple expressions of interest in the decades since, a number of projects have had to be abandoned. Most recently, in July this year Prime Minister Narendra Modi’s government suffered a potential setback when Foxconn walked away from a $19.5 billion semiconductor joint venture with mining conglomerate Vedanta Ltd.

India’s history with semiconductor trade

Another recent initiative is the Indian Semiconductor Mission (ISM), launched in late 2021 by Minister Ashwini Vaishnaw. A specialized and independent Business Division within the Digital India Corporation, ISM’s vision is to “build a vibrant semiconductor and display design and innovation ecosystem to enable India’s emergence as a global hub for electronics manufacturing and design in a more structured, focused, and comprehensive manner”. Its objectives include the formulation of a long-term strategy for developing semiconductors; supporting start-ups; and promoting mutually beneficial partnerships with national and international agencies, industries and institutions.

By coordinating on incentives and rules, India and Japan will hope to strengthen partnerships between the Indian and Japanese private sectors. Both will invest in their strongest areas – Japan’s raw materials, for example, and India’s 50,000+ design engineers – with the ultimate goal of building an optimal supply chain.

The post India & Japan’s silicon handshakes appeared first on TechHQ.

• Shein vs Temu is probably the biggest ecommerce battle you’ve never heard of.
• The retailers are at war over exclusivity clauses and hoarded resources.
• The outcome of the Temu lawsuit has yet to be decided.

Online retailers Shein and Temu are battling it out in America, with Temu filing a lawsuit against its rival. Despite the suit making international headlines, many are unaware of either company’s existence – here’s a rundown of the situation.

Shein and Temu are both Chinese-owned ecommerce companies. They’re two of the multi-billion-dollar businesses that operate almost completely digitally, often on apps downloadable on the Apple App Store or Google’s Play Store. So how come you’ve never heard of them?

You may be more familiar with the longest running player in the market – Alibaba. For a while, the site was the most popular online shopping destination and the world’s fastest growing e-commerce market.

Its customer base is huge, and the range of products on offer even larger. Part of the reason for its profit margins is a lack of overheads; there aren’t vast warehouses storing all its offerings, which range from leather belts to industrial compressor parts.

The business model is called dropshipping, a form of supply chain management whereby the seller transfers orders and shipment details to either the manufacturer or a fulfilment house, which then ships goods direct to the customer.

According to Shopify, a platform that so-called entrepreneurs can use to create their own (dropshipping) online shop, the business model is attractive because it requires minimal investment and allows you to focus more on marketing and business development.

READ NEXT

What can generative AI do for business?

In the age of automation, the whole process of dropshipping can be done via a software that is designed to easily integrate with ecommerce platforms to provide a seamless front-end shopping experience and a simplified backend experience for businesses. In some cases, it can be extended into marketing efforts, too.

Jack Ma. Photographer: Lam Yik Fei/Bloomberg via Getty Images.

It also takes away responsibility for product quality and is a popular way for e-commerce platforms to run. Since China is known the world over for its manufacturing monopoly, it makes sense that e-commerce sites operating in this way often have ties to the country.

However, after complaints about Alibaba’s monopolistic trading practices and data collection, a huge antitrust probe into the company saw the Chinese government dish out its biggest ever fine – $2.8 billion. The company lost 75% of its market value between its peak in October 2020 and the same month two years later.

Its founder, Jack Ma, lost his status as “Daddy Ma” in China and has been seldom seen since the government began investigating his various income sources.

Speaking of data, another ecommerce platform that’s gaining an increasingly large market in the US and Europe is Alibaba-owned AliExpress. To order from the site, which launched in 2010, users have to sign up.

Signing up means, manually or by connecting a social media profile, you provide information including your age, nationality, gender, and interests. Other information asked of you includes marital status, children’s birthdays, the industry you work in, your average salary, an estimate of how much you spend when shopping online per month, and other online shops you use.

All of this, besides your kids’ birthdays and other online stores you use, is a requirement to creating an account. More savvy consumers will connect the dots: without wasting time on cookies, AliExpress will know not to recommend his-and-hers slankets to unmarried shoppers.

Source: Pinterest.

The rise of Shein

This brings us to another ecommerce boon: social media marketing. That’s where Shein’s creator Chris Xu triumphed with savvy SEO use and TikTok strategy. The shop sells fast fashion at very cheap prices – enabling TikTok ‘haul’ videos that show creators unboxing piles of (individually wrapped in plastic) items of clothing.

YOU MIGHT LIKE

GREEN TECH

China renewable energy calculations sum up carbon neutrality goal

The topic “Shein haul” has 4.5 billion views.

Worth $100 billion in 2022, it was founded in 2008 as an e-commerce site selling wedding dresses made in China under the name SheInside. The focus shifted to fast fashion in 2015, when the site rebranded as Shein (which, by the way, is pronounced “she-in”).

shein is pronounced she in pic.twitter.com/JTprqlEmr2

— ✦ (@rei1000000) October 2, 2021

The impact of COVID-19 and lockdowns pushing consumers online brought a boom for the company, which has come under fire for labor practices and the role of fast fashion in pollution. It produces thousands of garments within tiny timeframes, keeping up with the ‘trend cycle.’

Part 1 of a Shein haul posted to TikTok.

Not only does dropshipping make this possible, but Shein uses white labelling. The practice is the reason that two identical tops might appear to have been made by different retailers: one product is mass produced and distributed amongst manufacturers, who will add their own label or logo and sell to consumers.

Shopify has a convenient listicle of white label items, which it presents as an opportunity for you (yes! You!) to “go to market this week with your own brand of massage gun, memory foam dog bed, or skin care serum.”

It means, like dropshipping, that sellers don’t have to manufacture goods themselves and can quickly jump on market trends. It also means market saturation, no quality variation, and underselling.

It’s rumored that Shein is now using AI to track trends and create its own offerings accordingly, almost always at a much lower price than what’s already available. This might also be what’s to blame for its well-documented habit of producing blatant rip-offs of artists’ work at a fraction of the original’s price. The artists don’t receive credit or royalties.

A tweet from an artist whose artwork was copied from Instagram onto a Shein shirt.

A clothing designer whose swimwear was copied by Shein.

It might be that increased awareness of Shein’s climate impact and theft of intellectual property are responsible for the fact that since its peak in 2022, sales have taken a downturn.

Or, and this seems to be the opinion of the company, it might simply be that a rival has begun poaching its customers.

Shein vs Temu: the nature of the beef

Ecommerce site Temu only reached the US in September, 2022. The digital marketplaceis the no.1 free shopping app on both the App Store and Play Store, and offers any product from car accessories to clothes, from home appliances to baby shoes.

Of course, everything on sale is very cheap because, so the line goes, Temu is “connecting customers directly to suppliers.” The reverse-manufacturing model supposedly helps the company decrease waste, and whatever it’s doing has worked: its monthly user base is three times that of Shein.

It does, even if only nominally, address all of the issues that Shein represents: dropshipping and infringement of intellectual property are strictly banned.

A legal battle has begun between the competing companies as they fight for the American market share. The latest blow came in the form of Temu’s antitrust lawsuit against Shein in federal court in Boston on July 14.

It alleges that Shein forced Chinese clothing manufacturers into signing exclusive agreements with the online fashion retailer and threatened them with fines and penalties if they worked with Temu.

Naturally, Shein denies the accusation: “We believe this lawsuit is without merit, and we will vigorously defend ourselves,” a spokesperson said. The company doesn’t sell within China and there are questions over whether China will step in, as it did against Alibaba.

While the lawsuits are filed in America, both companies are are distancing themselves from China amid Beijing/Washington disputes, as some US lawmakers push for a blanket ban on Chinese apps. While its suppliers and back offices are still in China, Shein’s headquarters have been relocated to Singapore.

Temu calls itself a Boston-based company and has removed from its site any links to Shanghai-based PDD Holdings, which owns it.

Besides the issue of price control, why is Shein trying so hard for a monopoly, given the quantity of apparel suppliers in China? The answer could lie in a post on Xiaohongshu, China’s lifestyle and experience sharing community.

READ NEXT

Chinese billionaires investing in generative AI

The poster discusses the difficulty that her jeans factory is having in sourcing cotton not from the Xinjiang province. The US fashion industry is leaning away from Xinjiang cotton because of a law that came into force in 2021, granting US border authorities greater powers to block goods linked to alleged forced labor in China.

With limited availability, Shein is clearly trying to get ahead of Temu in the American market by hoarding the approved cotton. Pesky human rights, messing with the supply chain!

It’s not just cotton, though: as of May, Shein has required all of the approximately 8,338 manufacturers supplying or selling on its platform to sign exclusive-dealing agreements, preventing them from selling on Temu or supplying products to Temu sellers, according to Temu’s filing.

Shein is bound to bite back soon, and with a better understanding of the ecommerce platforms, we’re sure you can’t wait to follow along.

The post Shein vs Temu: an ecommerce explainer appeared first on TechHQ.

How many commercial-scale PV and wind power plants will China need to achieve its carbon neutrality goal by 2060? According to a new study – ‘Accelerating the energy transition towards photovoltaic and wind in China’ – published this week in the journal Nature, the answer is 3,844. And the calculations, performed by experts in China, Japan, and Europe, put numbers to the renewable energy scale-up required.

China renewable energy facts

Today, China is already the global leader in wind and solar farm capacity. Figures collated by Global Energy Monitor – a non-profit on a mission to develop and share information in support of the worldwide movement for clean energy – show that China has well over double the installed wind capacity of the US.

READ NEXT

Smart electricity grid sensors solve power puzzles

And when it comes to active PV installations, Global Energy Monitor’s solar power tracker indicates that more than half of the world’s operating capacity is located in China. Combining wind and solar, China’s current renewable energy capacity is in excess of 500 GW, which may sound like a lot, but is still just a fraction of what’s required long term.

For example, the study’s authors forecast that – based on China’s 14th Five-Year Plan for a Modern Energy System – the country’s capacity for renewable energy generation will likely reach somewhere between 5 and 9.5 PWh per year. Whereas achieving carbon neutrality in China by 2060 will require scaling up renewable energy from wind and solar sources to as much as 15 PWh per year.

And this mismatch points to the need for much greater investment in PV and wind power in the country, from current levels of around US $77 billion to US $426 billion in the 2050s. Home to 18% of the world’s population, China’s share of global carbon dioxide emissions has risen to 28%.

But given the resources available, it’s feasible for the country to lead the way in the global clean energy transition – especially given its manufacturing expertise in producing PV panels and wind turbines.

China dominates the solar industry and has leadership across each stage of the manufacturing process, from the preparation of polysilicon ingots to wafer slicing, cell fabrication, and module assembly.

Top wind turbine manufacturers (onshore + offshore)

1. Goldwind, China
2. Vestas, Denmark
3. GE Renewable Energy, US/France
4. Envision, China
5. Siemens Gemesa, Spain
6. Mingyang, China
7. Windey, China
8. Nordex, Germany
9. SANY, China
10. CRRC Wind Power, China

[Source: BloombergNEF]

Ranking global wind turbine manufacturers, the majority of the top 10 firms are Chinese companies. And, subject to materials availability, these industrial strengths certainly put China and renewable energy on the same page – particularly in key categories of wind and solar, which experts see as being the most versatile solutions.

“Among renewables, PV and wind power have wider ranges of application than hydropower, generate less detrimental effects on food and ecosystems than bioenergy, and probably entail lower costs than carbon capture and storage,” write authors of the study published this week in the journal Nature.

Shipshape: workers check solar panels built on a fishing lake in China. Image credit: AFP.

The researchers considered a wide range of factors – resource limitations, administrative boundaries, land suitability, restriction of land use, ground slope, land cover, latitude, longitude, terrestrial and marine ecological conservation, water depth at offshore wind stations, shipping routes, solar irradiance, wind power density, and air temperature – to visualize the optimum renewable energy mix in China.

And, according to the group, the ideal combination of utility-scale facilities (> 10 MW capacity) corresponds to 2,767 solar farms, and 1077 wind plants, including 11 offshore developments.

READ NEXT

US agrivoltaics projects offer energy security

Wind and solar are complementary, with solar peaking during the day and wind at night. And, over the longer term, in summer and winter, respectively.

Large-scale conversion to renewable energy has, in the past, raised fears of grid instability and high-energy storage cost due to the uncertainty of wind and solar. But simulations – this time considering scenarios for the continental US between 2050 and 2055 – reveal that grid reliability and 100% clean energy penetration are not incompatible.

“Solutions are obtained without higher-cost stationary battery storage by prioritizing storage of heat in soil and water; cold in water and ice; and electricity in phase-change materials, pumped hydro, hydropower, and hydrogen,” wrote Mark Jacobson of the University of California, Berkeley, US, in a 2015 study.

Agrivoltaic trend

In terms of land use, deserts, grasslands, and oceans should provide most of the space for renewable energy expansion in China. On TechHQ we’ve written previously about how solar, animal farming, and crops can co-exist – a field dubbed agrivoltaics. For example, solar panels can provide shade for animals, while livestock contribute by keeping surrounding plants under control so that PVs receive maximum irradiation.

And there are examples already on China’s mainland, such as in Guizhou province (in the southwest of the country), where farmers harvest Sichuan peppers in fields shared with solar panels that offer shelter from the hot sun.

Large scale project: employees work on wind turbine hubs at a factory in Lianyungang, in China’s eastern Jiangsu province on February 28, 2023. Image credit: AFP.

Increased renewable energy capacity would give China greater energy security and some of the costs of development would be offset against savings from reduced fossil fuel purchases. However, modeling does assume investment in building ultra-high-voltage transmission lines to provide efficient energy distribution – boosting capacity and reducing electricity losses – across the vast territory.

Also, because facilities will be distributed widely across the country and not just concentrated in China’s richer regions, there’s potential for wind and solar infrastructure to play a role in increasing per-capita income from $29,000 to $34,400 in North China and from $29,100 to $30,600 in Northwest China – based on research estimates. Renewables can bring development to desert and marginal lands that otherwise have little in the way of revenue opportunities for residents.

Studies also point to the value of collecting geospatial data. Advances in satellite imaging are making it possible to position solar arrays in locations that offer the brightest prospects for clean energy generation.

The post China renewable energy calculations sum up carbon neutrality goal appeared first on TechHQ.

• Japan will slow semiconductor exports to China.
• New regulations prove commitment to US aims in chip battle against China. 

Japan has proven its allegiance in the semiconductor battle. On July 23, Japan strengthened its chip export regulations, per US requests. Part of the ongoing effort to block China from manufacturing cutting-edge semiconductor products, the new regulations relate to a specific step in the process of chip manufacturing.

The Japanese industry will have to approve exports of the 23 items used in film deposition – the process of forming thin film coatings on substrate material – lithographic exposure and other processes of semiconductor manufacturing.

This will slow down export procedures, in some cases making it impossible to export items altogether. The chip battle is being fought with red tape.

The strengthened regulations won’t cover exports of equipment for manufacturing conventional semiconductor products, such as those used in electrical appliances and automobiles.

According to trade statistics released by the Finance Ministry, in 2022 Japan exported over 4 trillion yen’s worth ($28 billion) of manufacturing equipment. China took more than a 30% share of this, making it the largest destination of Japan’s exports.

Although the Japanese government hasn’t identified the manufacturers of equipment items covered by the strengthened regulations, a senior ministry official indicated that about 10 or so companies, including Tokyo Electron Ltd., Nikon Corp. and Hitachi High-Tech Corp., would be affected.

To ensure that other countries can cut through the imposed red tape, comprehensive approval will be granted for exports to 42 countries and regions, including the United States, South Korea and Taiwan.

Japan enters ongoing semiconductor war

Back in October, the US government restricted exports of manufacturing equipment and provision of technology to China for cutting-edge semiconductor products that could be used in military applications.

As the restrictions have become more punitive, the United States has called for Japan and the Netherlands to make concerted efforts to enforce similar restrictions. Both countries are home to companies that hold large market shares in semiconductor manufacturing equipment.

Tokyo has followed Washington’s lead – but, according to industry minister Yasutoshi Nishimura, the strengthened regulations don’t target a specific country.

YOU MIGHT LIKE

SUPPLY CHAIN

South Korea and Taiwan allowed to continue Chinese operations

This September, the Netherlands will introduce new export regulations on semiconductor manufacturing equipment.

Naturally, China has criticized the moves that the US and other countries have made, calling their efforts attempts to split the supply chain in the semiconductor industry. In December, Beijing filed a complaint against Washington’s policy with the World Trade Organization.

In retaliation, China announced plans to regulate exports of gallium and germanium on July 3. The rare metals are used in the manufacture of some advanced semiconductor products and will be restricted from August this year.

The moves by all parties are thinly-disguised manoeuvres in a trade war that impacts the nervous system of modern economies: the silicon that powers commerce and everyday life.

The post Japan gets into bed with US in chip row appeared first on TechHQ.

Companies researching the best way to receive international payments in 2023 soon discover that they have no shortage of options for accepting foreign currency from customers overseas. And that includes blockchain-based cross-border payment solutions such as Ripple. The US tech firm has long been on a mission to ‘build breakthrough crypto solutions for a world without economic borders’ – but how do blockchain-based cross-border payments work and should your organization use them?

Making overseas payments using traditional banking systems means lining up multiple intermediaries between the payer and the beneficiary. And with each link in the chain taking a fee for enabling the transaction, the cost of international payments adds up. Plus, those transfers can be delayed if cross-border payment requests happen to coincide with a weekend or bank holiday. Also, the pre-funding of overseas accounts locks up working capital.

Ripple’s blockchain-based cross-border payments, on the other hand, promise settlement in seconds, not days. And transaction fees are kept low by removing no-longer-needed intermediaries from the equation to give customers competitive last-mile payment rates.

How does Ripple work?

Ripple’s solutions are built using the XRP Ledger, which is a blockchain for IOUs and enables transactions between different payment types. The digital ledger has a number of features that make it attractive to fintech providers looking to modernize financial services, including on-chain escrow that can gate XRP and release it once payment settlement conditions have been met.

Using XRP as a digital intermediatory, Ripple cross-border payment settlement is active in more than 50 countries, allowing users to send a variety of currencies using the blockchain-enabled system. Senders receive a fiat-to-fiat quote on pricing and FX, and beneficiaries can be paid out immediately in the chosen currency.

Ripple is an interesting case study on how fintech providers are using blockchain to modernize the provision of financial services. Rather than compete against traditional banks, Ripple is reaching out to them – offering its digital currency payment rails as a high-speed, more efficient alternative to legacy systems such as SWIFT.

Ripple vs SWIFT

SWIFT, a global member-owned cooperative that specializes in secure financial messaging services, connects more than 11,000 banking and securities organizations. And the Belgium-headquartered organization has customers in more than 200 countries, putting it ahead of Ripple.

READ NEXT

Quantum computing in finance: steampunk chandeliers have their uses

But announcements by SWIFT, such as a successful experiment to move tokenized assets using its infrastructure, show that even dominant players are having to adapt to a financial future that could be increasingly blockchain-based.

A common criticism of cryptocurrencies has been their energy demands, with Bitcoin miners propping up the profits of energy companies and chip makers. A switch from proof-of-work to proof-of-stake shrinks this carbon footprint by reducing the computing demands of running a digital ledger. Rather than mining for cryptocurrency, users can earn rewards by staking their cryptocurrency to participate in the consensus mechanism of the blockchain.

The safety net comes from the idea that stakeholders won’t want to jeopardize their locked-up cryptocurrency by attempting to add invalid blocks to the chain. But there are fears that proof-of-stake networks could become centralized if a large amount of cryptocurrency is controlled by just a few actors.

The XRP ledger, which underpins Ripple, gets around this by adopting a different method of coming to consensus on adding blockchain entries. XRP makes use of a so-called federated byzantine agreement, which relies on validators overlapping in their endorsement of yet-to-be-added transactions. For example, if 80% of validators agree on adding a block to the chain then those details are assumed to be trusted.

And nodes carry their own unique node lists (UNLs) of validators, which they believe provide reliable information – removing them if they keep failing to reach consensus. Overlap between UNLs provides continuity across the community, with the XRP Ledger gravitating towards proven validators and shying away from untrusted nodes. But there could be a catch.

READ NEXT

Enterprise blockchain: digital payment rails on track

A study by researchers at KAIST in South Korea on Stellar – a cryptocurrency that also operates using the federated byzantine agreement method of reaching consensus – showed that, rather than encouraging decentralization, the approach can bake in dependences on certain key nodes.

“We show that all of the nodes in Stellar cannot run SCP [Stellar Consensus Protocol] if only two nodes fail,” writes the KAIST team in its paper. “To make matters worse, these two nodes are run and controlled by a single organization, the Stellar Foundation.”

And like Stellar, Ripple operates its own validators, which could be problematic if those nodes form the dominant link between the various UNLs. Also, blockchains aren’t bulletproof and exhibit residual failure modes – something that David Schwartz, Chief Technical Officer at Ripple, admits.

“It’s important that we continue to innovate to reduce the odds of them happening and reduce their severity even if it is a bit embarrassing for the industry to point the finger at these failure modes,” he commented at Apex – the XRPL developer summit, in a talk on the continuous evolution of the XRP Ledger.

Ripple's latest report let this sink in.. 250 trillion by 2027 in cross-border payments alone. #XRP pic.twitter.com/2SCe8h8ZnV

— RIZ.XRP (@RizXRP) July 19, 2023

In Ripple’s case, the ledger could halt its forward progress if too many validators fail before humans can respond to the issue. And, as Schwartz points out, the goal is to have ledgers that offer maximum reliability. Hence, it’s why developers are working on solutions such as Negative UNL – a feature of the XRP Ledger consensus protocol designed to improve ‘liveness’.

“Using the Negative UNL, servers adjust their effective UNLs based on which validators are currently online and operational, so that a new ledger version can be declared validated even if several trusted validators are offline,” explains the latest XRP Ledger documentation.

Given the rollercoaster ride that cryptocurrencies have been on lately, it’s promising to see fintech firms being transparent about potential weaknesses. And if these are signs of blockchain developers building firm and well-tested foundations, digital ledger projects may live up to the hype after all.

The post Blockchain-based cross-border payments – the Ripple effect appeared first on TechHQ.