How Blockchain Will Transform Shipping and Logistics (3.18.24)
Blockchain banishes inefficiencies by making logistics transparent
Cargo theft is a billion-dollar problem, surpassing the $50 billion mark just a few years ago. Much of this loss is due to inefficiencies that can be resolved with blockchain, which increases supply chain visibility and logistics. It’s a transformative technology that creates a public ledger and documentation system that records and reports changes in real-time.
What if updates to your ledger were made securely and as they happen by all supply-chain contributors instead of just you? Think about the reduced costs and gained efficiency. That’s the promise of blockchain, which by some estimates will increase global GDP by up to 5%.
In this article, we will discuss how blockchain technology is impacting and will continue to change the industry by understanding:
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The power of blockchain
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Why blockchain is a perfect fit for shipping and logistics
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How blockchain solves current shipping obstacles
The power of blockchain
Technology and progress aren’t always friends to the supply chain. Its global nature has overwhelmed progress, which has been unable to offer insight into supply chain efficiency. It became even more difficult to connect the dots as those dots moved farther apart — sometimes to the other side of the planet.
Blockchain offers a way to create a deep, clear look into supply chain logistics. The technology was originally associated with cryptocurrency, but three properties make it a perfect fit for shipping and logistics.
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Blockchain is distributed: A ledger is duplicated across many systems. While that might sound dangerous, the ledger can’t be changed or updated unless there’s a consensus between all versions of the file. Any consensus change to one version is duplicated across all.
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Blockchain is secure: Private cryptography keys are needed to prove you have the authority to change or update the ledger. Any alteration generates a timestamp.
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Blockchain is accessible to anyone who has permission to view a file: Or, just parts of a file. It allows anyone anywhere to monitor for changes, even though they might be able to make changes themselves or view any other part of a file.
Why is blockchain a perfect match for shipping and logistics?
Imagine if you could verify every piece of information you needed from a vendor in real-time. Blockchain allows this, helping organizations automate scheduling and shipping while securing each step. All this information flows into a single ledger and authorized contributors have access to associated supply information. Nothing else has been able to offer this level of visibility.
Visibility aids with transparency. Blockchain technology decreases cargo theft and fraud because every transaction is recorded on a block. Since the process requires consensus, there can be no dispute about transactions or changes and records can’t be erased.
How blockchain solves current shipping obstacles
It’s estimated that up to 20% of administration costs are attributed to the inefficiency of transactions. In other words: paperwork. Blockchain completely removes this obstacle.
“How do I know this fleet or truck is maintained?” It’s a valid question, and your vendor might be able to eventually supply you with information. Meanwhile, progress stops. Blockchain will give shippers access to real-time vehicle maintenance information as well as movement.
IBM recently reported that the transportation industry has about $140 billion tied up in disputes and payments at any given time. What are these disputes doing to your operations due to cash flow? Blockchain’s transparency can solve these problems.
The American Trucking Association reports that 1.5 million trucking companies employ around 3.5 million truck drivers. It’s an industry that’s big yet small — 90% of these companies have truck fleets of six or less. As a result, truckers drive more than 29 billion miles with partial or empty loads. Blockchain would allow for LTL efficiency by giving the industry a single, secure and frictionless network for scheduling and logistics.
Perhaps the most powerful way blockchain can help shipping is its ability to transform freight tracking. Consumers today can track the progress of what they buy online. Commercial transportation companies must step up and deliver on these expectations.
Tracking technology is nothing new to the industry, but securely sharing this information is. Blockchain technology creates a transparent network of validated real-time data so there’s no misinterpretation or manipulation.
Smarter, safer and more efficient
Supply chain logistics and trucking have many parts and players, most of which have processes and technology that simply can’t interface. The default process is usually the highly inefficient use of paper forms.
Blockchain technology allows more than half a trillion dollars of cryptocurrency to be traded securely in a trackable and nearly instantaneously way. But blockchain technology is a backbone that allows for more than money. It could remove the inherent inefficiencies of logistics and transportation by streamlining operations and providing better service. It’s a global gamechanger.
Looking for a partner to help you integrate blockchain into your operations? Learn more about how we can help.
