Stay up to day about the most exciting logistics tech and innovations: Follow us on Twitter and LinkedIn.What is Blockchain?Blockchain technology is essentially a database which stores data that is completely clean, incorruptible and fully auditable manner.Going a level deeper, it is a distributed database technology (it allows multiple users). Information is stored securely and transparently, with or without a centralized governance/ control system.The technology underpins Bitcoin and all cryptocurrencies. While a blockchain can exist without cryptocurrencies, a cryptocurrency cannot exist without a blockchain.In the current industry context, blockchains are primarily used to code both business and governance processes, governing almost any transaction and then storing the record of that transaction on the associated blockchain. All the parties engaged in this transaction are also stored in an incorruptible way. Sounds like magic? Recording transactions on a blockchain produces a permanent, immutable record. Instead of relying on a single centralized authority/ company/ bank, the blockchain enables all participating entities to verify a transaction’s authenticity and examine its contents independently. |
As mentioned before, Blockchain technology is used for cryptocurrency infrastructure, but this is a small part of the use cases. We’ve recently seen the integration of blockchain in sectors such as healthcare, media, and logistics
Let’s take a closer look at the USD ~10 trillion dollar logistics industry, where we believe the blockchain will have its first successful use cases.
Logistics Industry
Logistics is becoming more complex. It is already one of the most highly fragmented industries globally with a high level of entrepreneurs and providing an important source of employment. More and more stakeholders, including governments, are becoming involved with supply chains, making the rapid availability of information critical for success. The delivery of each shipment will almost always involve multiple parties and multiple sources of documentation.
Either directly or indirectly and there are many issues and challenges along the supply chain that increase this complexity.
1. Real time Location: The location of shipments in transit is often unknown. This makes it challenging to plan delivery timeframes for customers and impairs the ability for all stakeholders to use business resources efficiently.
2. Trusted Auditability: Establishing a reliable audit trail is becoming critical for customers, businesses and regulators as sustainability expectations rise.
3. Operation tracking: In many countries, logistic operations are tracked by hand, email or telephone. Pen, paper and old technologies like fax and email always result in delays as the underlying information cannot be transferred or accessed by all parties quickly. Even newer digital technologies do not allow simultaneous real time access
4. Conflict Resolution: Resolving conflict along the supply chain is time-consuming, complex and expensive. With so many moving parts and many stakeholders involved it is often very difficult to find the reason for a problem and a single version of the truth to resolve a transactional conflict leading to unnecessary negotiation time and legal fees.
5. Slow Payment: Slow payment plagues the industry and many small and medium-sized carriers don’t have the liquidity of the larger players. Slow payments can actually create an existential risk for SMEs.
These issues are making logistics operations more complex and less effective. As a result, the demand for end-to-end visibility, communication, transparency and dependability is rising in the sector, with the carriers responding to rapid time-saving solutions and rapid payments.
Blockchain is perfectly poised to solve these problems.
How can blockchain enhance the Logistics Industry?
Blockchain in logistics can easily be used to manage the supply chain more efficiently. Parties can keep track of multiple variables such as:- price, date, location, quality, certification, etc. using a blockchain. The real time availability of this information improves visibility and compliance.
It increases the traceability of the material supply chain for all businesses in the transaction. The potential to reduce losses to grey market and identify counterfeit products is enormous. Many companies are experimenting with the technology to strengthen an organization’s position as pioneers in ethical manufacturing.
In road freight the blockchain will provide the fragmented market place with a trust layer to operate on. This will ensure that stakeholders can come together in a marketplace fashion and trust that each party really is who they say they are. Verified documentation like transport licenses, insurance documents and more, can all be attached to a companies profile on a blockchain based system.
This can be take a step further by capturing data along the an orders workflow. From order to cash. All negotiations, their terms and contracts can be captured and uploaded to the blockchain along with information about who is involved in the transaction. All of this data can then enable the automation of the manual tasks like proof of delivery, and payment. This will decrease the time it takes from initiating and transport order to actually closing it. Lastly, this information will always be available should a company need to be audited for any reason.
Now let us understand how blockchain can revolutionize Logistics:
Improved freight tracking
The primary use case of blockchain in logistics is to track shipments transparently, i.e., by all parties involved and to verify successful delivery. Commercial transport companies have an increasing demand to innovate. The need for same-day delivery is rising and with that so do customer expectations. Blockchain networks contribute to and confirm data by leveraging the blockchain for data authentication. The data that is recorded on the blockchain cannot be tampered with. As tracking dependability increases, estimated time frames become narrower and more dependable too.
Invoicing & payments
The small and medium-sized organizations(SMEs) involved in logistics operations usually maintain paper-based and manual records. This means that the larger freight forwarder organisations such as DHL, Panalpina, Kuhne & Nagel etc are forced to be able to manage paper. Many parties are involved in the process and as a result, large amounts of paper-based handwritten and hand-signed documents are created. This causes a massive issue when it comes to invoicing. Companies are forced to spend a lot of time matching invoices with payments that are due or that have been credited. Blockchain enables smart contracts to automate billing and payments. The resulting data is clean with a clear audit trail and complete transparency. This reduces processing times, ensures correctness, preserves data and enhances sharing capabilities. It also results in much-improved customer satisfaction with frictionless conflict resolution.
An example can be seen with the Rapid Payment functionality on TrustedTrucks.
Tracking fleet & vehicle performance
The value of tracking goes beyond delivery effectiveness. It also applies to the efficiency of particular vehicles in a fleet. For example, When a business wants to buy a used vehicle. They can rely on the blockchain to authenticate past performance and maintenance history data of the vehicle. Additionally, a company with a large fleet of vehicles can track the performance of the vehicles they own.
IoT and AI with blockchain Integration
Blockchain can benefit capacity monitoring and environmental control when integrated with IoT. For example, the price of shipping freight is often proportional to the cargo volume. Shippers and transport providers can assess the cost of a package based on the amount of space it takes up using IoT sensors. These IoT sensors can be placed in the vehicles and can then send the data to the blockchain.
When the COVID-19 vaccine was introduced, there was a wave of relief globally. But one of the major issues to solve was how to transport these vaccines. The temperatures in large countries vary from region to region. This posed the risk of vaccine spoilage. So the vaccine had to be transported in a temperature-controlled environment. The transport of many pharmaceutical drugs requires special vehicles for temperature control. This increases the administrative cost and poses the risk of spoilage due to changes in temperature across various areas. Hence, using blockchain, stakeholders can track and control the temperature of the containers.
Wrapping up
We know that blockchain will revolutionize the logistics industry in the future. According to blockchain technology timeline study by ARUP the revolution will start with the transport industry.
