News — February 19, 2018

Opinion Piece: How the Blockchain System is Defeating Fake Drug Traffickers

The distribution of fake drugs, along with other illicit goods, is a major issue for port community logistics.

In February 2017, the ABC published an article on fake drugs entering Australia’s healthcare systems. These fakes are made from ingredients that appear similar to the real thing but that are often toxic, and are packaged in almost identical fashion. They are manufactured both locally and overseas.

It has also been revealed that fake Viagra tablets made their way into the supply chain of the Sydney Children’s Hospital. Viagra is used to control pulmonary hypertension in children, and the fake tablets were discovered in time by a pharmacist who became suspicious of their texture.

Substitution of fakes for the real thing and goods disappearing from the supply chain is a massive, worldwide problem.

Fake drug trafficking is a lucrative business. The Paris based International Institute of Research against Counterfeit Medicines (IRACM) found that for $1,000 invested in the trafficking of counterfeit heroin, the return could be $20,000. But for counterfeit pharmaceuticals, the return can be anywhere between $200,000 and $450,000.

Last year, 16 African nations conducted cargo inspections in their main ports. Of the 243 maritime containers inspected, 150 contained illicit or counterfeit products.

A solution to the problem of fake drug trafficking

Clearly there is a need for freight tracking that ensures genuine drugs reach their destination without contamination along the supply chain – and a solution is now at hand.

An alliance between 1-Stop Connections, the global leader in integrated port logistics, and Sydney technology developer TBSx3 has produced an innovative solution: TBSx3 blockchain security architecture combined with 1-Stop’s flagship Vehicle Booking System (VBS).

The alliance comes less than a month after the successful completion of a global supply chain trial of the TBSx3 blockchain security architecture. TBSx3 tracked bottled wine from the wine growing region of Coonawarra in rural South Australia to the port of Qingdao in north-eastern China, a distance of 8,100 km.

A blockchain is a digital ledger of transactions distributed simultaneously to everyone in a group. Everyone can see transactions being made, and no one can alter transactions without everyone else in the group agreeing. A blockchain provides continuous live information, especially during custodial changeovers.

This means if one of the 30 or so people who handle goods on their journey decides to alter a manifest, the change is relayed to all members of the blockchain.

1-Stop Connection General Manager of IT James Skurray says that the adoption of blockchain technology in the industry will have its challenges.

“Blockchain in the freight and logistics market will present its challenges and trade-offs. With transparency and openness you get trust, but everyone also gets visibility of information. Some of this information has been a closely guarded secret in the industry for years. The successful adoption of Blockchain in the freight and logistics community, requires well thought out applications and close engagement with the industry so all members benefit from this technology and are compelled to use it as it provides value to their business and the wider community.”

Increase global freight security with 1-Stop and TBSx3

1-Stop Connections CEO Michael Bouari says the new system is efficient and secure.

“When goods can be moved quickly and when everyone within a port ecosystem knows exactly where they are, the opportunity to substitute fake for real is dramatically reduced,” he says.

“There is far less time for substitution and the identity of who is trying to affect the substitution can be better detected.”

Mr Bouari said security is strengthened in the new system, with more transparent understanding of what is being delivered and where it is from the beginning to the end of its journey.

When combined with TBSx3 blockchain security architecture, 1-Stop’s VBS web booking system becomes a platform that can be shared between owners, operators, shippers, logistics providers, regulators and end users. The system:

  • Cuts down time goods are in transhipment
  • Prevents delays in custodial changeovers
  • Breaks down the silos of supply chain participants
  • Improves supply chain transparency

Creating a freight platform is a process that cannot be imposed from the outside. It has to be developed by people within the industry who understand the issues and risks. 1-Stop Connections has developed multi-faceted platforms to integrate all logistic supply chain information for port operations.

The company has grown to dominate the New Zealand and Australian markets and it has a rapidly growing presence in South East Asia. In New Zealand, 1-Stop is an information logistics hub for 30% of all port container traffic, in Australia 90% and in the Port of Manila 100%.

The dark side of global supply chains – and the solution

TBSx3 was founded by Sydney-based lawyer Mark Toohey, an experienced general counsel for publicly listed media and technology companies. “There is a dark underside of the irrepressible growth in global supply chains,” Mr Toohey says.

“Sea freight volumes have increased six-fold in 50 years. This huge growth has created opportunities for expertly packaged fake product including fake medicine that is killing huge numbers of people each year.

“The international police agency, Interpol, estimates that each year one million people die from fake medicine. The World Health Organisation estimates that of the people who die every year from malaria, one of the three great global killers, 200,000 die as a result of taking fake anti-malarials.”

The alliance between 1-Stop Connections and TBSx3 has produced a new and powerful weapon against the penetration of supply chains by fake product.

In the process, a new security benchmark for global supply chains is being created.

The full media release about the alliance can be found here.