Blockchain, which first entered our lexicon with the arrival of cryptocurrencies like Bitcoin in 2008, is now a technology that promises to transform entire industries.
Blockchain technology is considered by many to have as much potential as AI (artificial intelligence), which is competing for research and investment dollars. Private and public companies, colleges and universities, and government agencies are all working quickly to leverage blockchain technology’s potential.
For the logistics industry, blockchain is promising to create transparency of all documents and transactions across the freight landscape, ultimately increasing the efficiency, agility and innovation of supply chains.
In a two-part article, we examine how blockchain technology can solve logistics inefficiencies, shed light on its many benefits and share real-world examples of how it’s already impacting businesses like yours.
Blockchain Can Solve Logistics Inefficiencies
Every day, shippers, carriers, brokers and other logistics professionals must navigate a plethora of options and “what if” scenarios when sending a truckload of goods across the country, all while documenting each step of the journey with detailed paperwork. The current process of moving goods from origin to destination is complex and lacking a single source of truth to store and track all transactions and constituents involved.
Blockchain technology is particularly adept at simplifying complex and fragmented processes— like those that are commonly found within the logistics and supply chain industry. Blockchain technology records transactions, tracks assets and creates a transparent and efficient system for managing all documents involved in the logistics process.
How Blockchain Technology Works
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 date stamped, unique and encrypted, 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 your chain.
Blockchain technology helps companies implement smart contracts—computer code hosted on a blockchain that defines and executes the terms of an agreement between parties.
In the typical scenario of shipping goods, numerous parties are involved—shippers, 3PLs, carriers and consignees. For every shipment, transactions and documents get executed and saved—BOLs (bills of lading), invoices, PODs (proof of delivery) and more. Each transaction becomes a permanent ledger record that’s easily validated by anyone with access to the chain. Using data from a blockchain, the network members can validate the block or payload of the transaction, creating a transparent and efficient system for managing all documents and transactions involved in the logistics and supply chain process.
In Part 2 of our blockchain in logistics series, we’ll discuss 10 benefits and share real-world examples of how it’s already impacting businesses like yours.