Using Blockchain Technology in the Logistics Industry
Can the logistics industry benefit from blockchain technology?
What if human error could be eliminated from data management? You’d never have to question revenue numbers or spend time resolving payment disputes, and you’d always know business decisions were based on accurate information. When it came to managing your supply chain, you’d know every step was precisely monitored.
While these situations may sound too good to be true, blockchain technology could make them a reality in the not-so-distant future.
A blockchain is a shared electronic ledger that provides a chronological and public record of transactions. With this technology, any kind of digital information can be tracked in real time, with no chance of it being altered or deleted. Think of it like this: instead of having to email a spreadsheet to someone so they can add their data and send it back, you could both work in it at the same time. And because each revision is recorded as a separate entry (not as an edit to the original version), the information can always be trusted.
Most people are familiar with blockchain technology because of Bitcoin and other cryptocurrencies, but some aren’t aware of its full potential. Its unique capabilities for data encryption, record keeping and information transferring can make it a beneficial addition to many industries.
Possible logistics applications
Businesses that rely on transportation and logistics companies to move their shipments across the globe could see significant value from blockchains. Potential uses include:
- Carrier evaluation
- Contract execution
- Supply chain visibility
- Theft prevention
With more than 700,000 for-hire carriers operating in the U.S., finding an easy and accurate way to vet them will help you choose the best option. Blockchain technology can keep a permanent record of a company’s performance history so that you can get a clear view of the carrier’s standings. This will eliminate any trust concerns, leaving you free to focus on other areas of the business.
One of the biggest benefits blockchain provides is the ability to create legally binding digital contracts, also known as smart or self-executing contracts. These are coded with specific “if this, then that” language to ensure they work exactly as intended. For example, say you have precise pickup and delivery times for a shipment. A smart contract can use the truck’s Electronic Logging Device (ELD) to record the exact times the truck arrived and departed. If those timeframes meet the contract terms, payment will be dispersed. Being able to control processes in this manner will remove the chance for contract disputes.
Supply chain visibility
Blockchain technology also could be used for real-time tracking. Every step of product delivery can be monitored through GPS and ELD data and through sensors placed on individual items.
And the possibilities don’t stop there. If a single blockchain were adopted industry-wide, you could interact with all carriers using a standardized interface. This would mean having one place to view your complete shipment history, track all of your freight and access all of your documents.
According to the FBI’s Uniform Crime Reporting Program, more than $26 million worth of cargo was reported as stolen in 2016. With theft occurring at these rates, finding a way to mitigate it is essential for businesses across the nation.
Blockchain can help with theft prevention in a few different ways: by eliminating fictitious pickups and digitally verifying freight volume. Photo identification and paperwork can be stored with blockchain technology, so the correct driver always gets the shipment, and receivers can instantly know if the correct number of pallets are in the trailer or if the trailer seal has been tampered with.
Is it ready to be implemented?
While notable blockchains like CargoX and ShipChain are already in place, the industry isn’t fully prepared to use the technology on a wide scale. This is primarily due to concerns about governance and standardization, but initiatives have been taken to find a solution. Several companies are working on use cases to study the different ways blockchain could be beneficial in the industry. Faster recall processes and more efficient contracts are just a few of the ways it’s being used, and there’s certainly more work to come.
What is ArcBest® doing?
Blockchain technology has the potential to streamline logistics processes and help businesses create more efficient supply chains, and ArcBest is determined to find the best solution for our customers. We’ve joined the Blockchain in Transport Alliance (BiTA) and are partnering with the University of Arkansas Walton College of Business so we can support the application of blockchain in our industry. These initiatives and our continued involvement in research and education will help ensure an outcome that benefits everyone involved.
For more information, please contact 800-610-5544 or firstname.lastname@example.org.