Did you know that paperwork—bills of lading, certificates of origin, invoices and insurance policies—accompanying most large shipments of goods, accounts for one-fifth of the total transportation costs? Imagine if you could do away with paperwork by digitizing the information and “beaming” it into the cloud where all involved parties could access it any time.
That’s the promise of the blockchain, a technology we’re investing in at GlobalTranz. Wired magazine notes supply chain and logistics transaction documentation to be “one of the potentially most compelling use cases for blockchain technology.” A plethora of startups—as well as major companies like IBM and Walmart—are betting that the technology will change the way goods travel around the world.
A recent Wired magazine article follows the path of a container of avocados from India to the Netherlands that “involves dozens of people and businesses.” In this scenario, reports Wired, “Farmers need to drop off the avocados, boats need to pick them up, regulators need to sign off on the container’s contents, and someone needs to make sure that the fruits haven’t gone bad. Most of these handoffs and communications are still done via analog technology.”
Up to 30 different parties are involved in shipping this one container of avocados. Blockchain technology can digitize the stacks of paperwork that accompany supply chain transactions and push it all to the cloud, where key information is visible to stakeholders within the supply chain. Notes Wired, “That system might live inside a mobile app, and involve other tech, like QR codes, cameras, RFID chips, or internet-connected sensors.”
Smart Contracts and Proving Provenance
The blockchain is a distributed ledger that digitally records transaction history between parties. Information gets stored in blocks of data that are “chained” together. Each data block added to a chain is digitally unique and encrypted with a date/time stamp and key, which makes it unalterable. Information in a blockchain can’t be hacked or counterfeited and is immediately “trusted,” and therefore, accepted by anyone with access to the related blockchain.
This essential trust element is what makes blockchain technology ideal for executing what is known as “smart contracts.” For example, notes Wired, “When that shipment of avocados reaches the port in Amsterdam, it could automatically trigger a payment to the shipper back in India. Smart contracts could also be used to handle the required paperwork since they’re more secure than an emailed PDF and cannot be easily manipulated.” Smart contracts can be enormous time and money savers.
Blockchain tech can also detect fraud and help shippers guarantee the provenance, or authenticity of products. Provenance ensures that every shipped good includes a digital “passport” that proves its authenticity. These so-called passports include essential data such as where and when the product was manufactured and what steps it took throughout its journey.
Future Blockchain Standards Are Essential
Blockchain technology has the potential to drive efficiency, visibility and cost savings into supply chain and logistics management, but full-scale adoption is only possible if we have standards.
Today, BiTA (Blockchain in Transport Alliance) is the vanguard leading blockchain standards creation in the transportation and logistics industry. BiTA is actively working with its members (GlobalTranz is a founding member) investigating use cases and developing a common framework for which the logistics industry can build revolutionary blockchain applications.
Read the complete Wired article for more insights into how blockchain technology will help transform logistics.
Learn more about Blockchain in Logistics.