Blockchain for Supply Chain, Transportation, and Logistics
There are big changes on the horizon for transportation and logistics companies. Many of these relate to new technologies that can help to revolutionize the process of making deals, serving customers, and getting physical goods from one place to another.
One such technology is the immutable ledger technology called blockchain.
Many of those who haven’t been paying attention to the latest modernization efforts within the industry might be confused by blockchain’s popular and rapid application to supply chain and transportation processes, because they see it more as an element of digital banking – but while blockchain is extremely valuable in the financial world, for combating fraud and money laundering, among other purposes, it’s also being increasingly used to help track and enhance shipments, and to improve the processes that logistics companies build their business models on.
A Matter of Trust: Building New Transaction Models
One key element of applying blockchain to the transportation and logistics industries involves transparency in terms of what a deal looks like, how a product gets delivered, and what various parties have agreed to.
An article in Winnesota points out that one of the major values of blockchain is in helping people that don’t know each other to come together and collaborate in good faith. By being able to make deals more transparent and track items right down to the SKU, blockchain helps with invoice disputes, questions, and concerns about delivery, and a lot of other potential problems that tend to plague today’s industry. Experts suggest that over $140 billion worth of delivery gets delayed each day due to trade disputes and that over-reliance on paper trails pads administrative costs for stakeholders. The “smart contracts” facilitated by blockchain are expected to eliminate much of this waste.
Use Case – Cold Chain Logistics
A prime example of blockchain utility in logistics involves cold chain logistics for delivery.
Developing a cold chain means documenting all of the handoffs that occur during the product’s delivery life cycle, and making sure that a certain temperature is never exceeded.
It’s not hard to imagine how valuable cold chain compliance or other temperature control processes can be. They’re routine in the pharmaceutical industry, as well as the food and beverage industry and anywhere that either heat or cold has a negative effect on any product.
“With blockchain, you create unbroken provenance,” Craig Fuller says in an interview with Forbes Insights. “Some call it ‘bread-crumbing,’ … what it means is you will be able to see any handoffs that have taken place or even the condition of the goods at any time, and where they were warehoused or transported during what period. And if I know everyone who has touched the shipment, I have a sense of whether it’s been tampered with or some part of it has been switched. I also know about quality control; for example, whether the goods have been maintained at the proper temperature, which is vital for many food products.”
Fuller is the managing director of The Blockchain in Transport Alliance (BiTA), a group that has sprung up to help handle blockchain applications across industries, with key standardization and consistency.
BiTA experts talk about how shippers often have problems with international delivery through a customs office, whether it’s because of a lack of cold chain verification, or other missing documentation. Blockchain, they say, promises to remedy a lot of these problems as well.
Today’s corporations are thinking outside the box and building a smarter supply chain, transportation and logistics systems with blockchain’s ledger technology. 3PL and logistics will never be the same as we progress toward a world of higher shipping standards and more verifiable delivery results.