What is Blockchain Technology?
Blockchain is an emerging technology that allows for the decentralization of data as well as making that data unalterable. A simple way to view blockchain is as a decentralized digital ledger of transactions. It is most famously known as the accounting method for the cryptocurrency, Bitcoin; but blockchain’s potential expands well beyond the current hype of cryptocurrencies.
The main characteristics of blockchain include being 1) decentralized, 2) verifiable, and 3) unalterable. These characteristics are viewed as having many advantages within the logistics industry. Transparency and trust between parties can be achieved by providing the same verified data to all members on the network. Blockchain technology has the promise of decreasing costs as middlemen are eliminated and antiquated systems are replaced with systems of higher efficiency.
Change in Logistics
Blockchain technology has the potential to greatly benefit supply chain management. Examples include:
- Improved traceability and trackability
- Elimination of middlemen, which cuts costs, reduces paperwork and shortens the supply chain
- Reduction in the cost of regulations and compliance
- Increased transparency of price, ownership and the entire process
- Accelerated payment, better security and reduction of fraud
- Simplified claims settlement
Another major advantage will be connectivity through IoT (the internet of things) where physical means of measurement, control and tracking can supply data and information. Blockchain technology will make sure this information is verified, distributed and hacker-free. Major companies, such as UPS and Walmart, are starting to realize these advantages, and new organizations to implement uniform standards have started to develop. One of the most important is BiTA, the Blockchain in Transport Alliance. It is composed of companies ranging from truckers, freight consolidators, logistics firms (including Logistics Plus) as well as software and information technology firms. Recently, BiTA announced that it would use open standards to encourage adoption and usage.
In preparing for blockchain, BiTA cites the following many use cases:
- Performance History – Performance history through the blockchain framework can allow parties to see solid and definitive evidence of past performance in all the relevant metrics. This removes the “trust” aspect from all deals
- Vehicle Maintenance – Blockchain allows for item by item records of vehicle repairs. Instead of one person holding an extensive repair history, it is held within the blockchain. The history can now effectively move with the equipment for anyone to see.
- Quality Assurance – Thanks to the distributed nature of blockchain, everyone involved in the transaction has access to all points. Taking photos and evaluating freight at pick-up and delivery locations reduces the likelihood of unsubstantiated disputes.
- Compliance – Blockchain and ELDs are a natural pair. ELDs can send a near endless stream of data to the blockchain in real-time. Pairing this information with traffic data, weather data, etc. allows for up to the minute rerouting.
- Capacity Monitoring – In trucking, available capacity can change throughout the day. The blockchain can provide the necessary transparency to know when and where capacity opens up, allowing participants to take advantage of shifts in demand.
- Payments and Pricing – Payment processing and settlement is all secure on the blockchain, and transaction information is easily accessible. By keeping detailed historic payment records, people can use more data than ever to determine rates.
- Fraud Detection – Every transaction that takes place on the blockchain is visible to everyone on the network, and nothing can be removed. This transparency removes many points where fraud occurs and eliminates double brokering.
- Theft Prevention – The blockchain can contain detailed information and rules. These can even include ID pictures and rules for the pick-up and delivery of the freight, increasing security and reducing the possibility of theft.
Blockchain isn’t just an industry disruptor, it’s technology that will revolutionize the way people do business. As blockchain and IoT converge, the result will be that the transportation and logistics industry may never be the same.