The transport and logistics industry is an important sector that focuses on moving people and products across locations. This industry’s complexities comprise several moving parts and multiple stakeholders, with its operations spanning across a global scale. Rising demand and competition have companies scrambling to be the fastest and most efficient industry players. The advent of blockchain in transportation has provided innovative solutions addressing security, transparency, efficiency, payments, cyber security, and traceability issues. This article explores the challenges faced by the transportation industry and how industry-wide blockchain implementation can be the ideal solution for all its shortcomings.
The Current Challenges in Logistics
The pandemic has brought forth a substantial increase in supply chain demand. Supply chain speed and efficiency have never been under a bigger spotlight. And with this increase in pressure on the logistics industry arise the following challenges:
- Speed and Efficiency: The quality of a service provider in the transport and logistics industry is dependent on the speed and efficiency of the services provided. Currently, the sector faces efficiency problems due to outdated business processes. With competitiveness on the rise, the industry needs upgrades to speed up processes to drive operational efficiency and reduce costs.
- Transparency and traceability: One of the core competencies of the logistics industry is the capability of transport companies to track and manage their payload across different locations adequately. The inability of transport companies to accurately track and log real-time inventory locations is a significant challenge facing the industry. This challenge often results in inventory misplacement and delivery delays. The current systems followed by the shipping industry are majorly trust-based, requiring third-party governance and working on the expectation that all stakeholders will act in honesty when conducting business. This system is prone to errors, fraud, and manipulation.
- Payment and invoices: Current systems in the shipping industry involve long waiting periods for invoices to be processed and payments to be released. Additionally, this industry faces high processing and administrative costs due to dependence on paper transactions. The transport industry’s other payment challenges are cross-border payment delays resulting from traditional third-party banking. The transactional time here usually is dependent on the transacting banks’ working and non-working hours.
Blockchain can significantly help the transport and logistics industry tackle various challenges such as inventory management and delivery optimization. With rising customer demand, it would benefit transport companies to educate themselves on the benefits of blockchain technology and how it could significantly influence the industry.
Benefits of Blockchain in Logistics and Transport
Blockchain technology is an immutable permanent ledger that cannot be modified or deleted. Its transactional data is forever stored and accessible on the chain. By integrating blockchain into the supply chain industry, businesses can keep price, time, location, quality, and other product information on the blockchain to always provide visible, available, and reliable data on a digital ledger. This ledger allows for increased organizational supply chain transparency by enabling stakeholders to digitally monitor a product at any point on the supply chain.
For instance, a bad batch of products can be easily identified using pre-assigned unique identifiers and instantly pulled out of circulation without the requirement for a complete product recall. Data tampering is nearly impossible by storing supply chain information on a blockchain block. Accessibility of these information blocks significantly improves business processes by providing real-time data reliability.
Every stage of a product on the supply chain can be recorded in real-time and shared across organizational stakeholders from its journey from supplier to shelf. Stakeholders can only access this immutable ledger with administrative permission. Hence, with efficient access control systems in place and an unlikely probability of incurring hacks, the blockchain system removes the requirement of trust from the transport industry. Most access holders share accurate real-time reporting relevant to the cargo. This secure form of corporate information sharing using blockchain is a way to increase the operational efficiency of the shipping industry.
In Action – Blockchain in Logistics and Transport
Here are the four ways blockchain is transforming the logistics and transport management industry:
Complete visibility of the movement of goods
In December 2018, IBM and global shipping giant Maersk launched Tradelens, a blockchain-powered automated supply chain tracking and management platform to keep track of cargo movement across international borders. This decentralized platform allows secure freight and cargo information between cargo owners, freight operators, domestic couriers, customs, government departments, and various ports and terminals. Tradelens is a cost-effective option that offers faster interactions with reduced errors and does not require third-party governance. All stakeholders using this platform can also track cargo and their corresponding documentation in real time.
Inventory tracking and transparency
The Farm to Plate company has revolutionized tracking ingredients and items on its supply chain by implementing blockchain technology. Farm-to-plate network users can access immutable and trusted data to manage food quality and waste with increased transparency. By utilizing QR codes or loT sensors, all supply chain processes are recorded and traceable in real time. Farm to Plate uses blockchain technology to record reliable data points such as soil temperature, moisture, weather conditions, and locations right from the origin point of the product. The organization’s stakeholders can easily access this data, control quality, and reduce overall recall. Hence, inventory tracking is much more efficient than traditional systems.
In 2016, before blockchain implementation, Walmart tested its transparency and trackability by attempting to track the source of mangoes sold in its US stores. It took the company over six days to find the produce source even though all the necessary data was present in the systems. This was due to the lack of transparency of the data. Applying blockchain to their inventory management, Walmart could track the mangoes from the source to the shelf in a little over two seconds. This significant improvement showcases the true transparency of blockchain in transport and logistics.
Improved payments and invoicing
Blockchain invoicing is transparent and instantly shared with all relevant parties on it. Once entering invoice data into the block, all network members on the chain can access it uniformly, allowing immediate payments irrespective of the distance between the transactors. And the best part about blockchain payments is that they are decentralized and don’t require an intermediary or third party, significantly reducing processing and transaction fees. China practically implemented blockchain invoicing with its first electronic blockchain invoicing system launched for the Shenzhen transportation system in partnership with Tencent. With this system, travellers would automatically receive electronic blockchain invoices on their mobiles upon trip completion, along with payment instructions.
IBM’s dispute resolution platform allows participants to send relevant process data and records to the blockchain with the documentation visibility shared only with stakeholders with appropriate access. This platform has made it possible for Home Depot to share relevant documentation information, product tracking information, and sales records with suppliers, vendors, and customers. Ever since Home Depot adapted to blockchain dispute resolution, it has reduced the time taken for dispute resolution and a 65% drop in overall disputes.
Leverage the power of Blockchain with Kreatorverse
Kreatorverse, a dedicated web3 product studio, specializes in everything blockchain technology. We help companies and entrepreneurs build innovative applications for the decentralized web. We’re working on exciting projects, including a crypto payment solution, DApp development, smart contracts, digital transformation using blockchain, crypto exchange development, crypto wallet development, and an NFT marketplace that reimagines fandom, bringing fans closer to their favourite celebrities in the metaverse.
We are currently working with Tusker Transport on their digital transformation and building a digital product strategy to scale. Contact Us to learn more about the industries we are transforming with blockchain and find out how we can transform your business!