The logistics industry; projected to be worth $15.5 trillion by 2023 and still likely to grow bigger thereafter. Yes, the transport and logistics industry is huge, but of course, it’s not without its fair share of challenges. First off, this industry is the backbone of just about every business across the globe. But unfortunately, managing the many links to the creation and distribution of goods is incredibly complex. For the most part, today’s supply chain can go through numerous stages, span over several different geographical locations and a boatload of payments and invoices. What’s more, the process involves several entities, most of whom may turn out to be less trustworthy than expected. In a nutshell; today’s supply chains are heavy with their own complexity and broken in more ways than one.
So what’s the solution? Well, as you probably guessed, blockchain technology can disrupt the landscape of the logistics industry and solve most if not all of its problems. In fact, many companies are implementing the revolutionary technology and enjoying its benefits as we speak. For the most part, blockchain can boost the efficiency and transparency of supply chains, banish inaccuracies, prevent frauds, and reduce expenses just to name a few. In a nutshell; the very things that are needed for the integrity, reliability and transparency in a supply chain lies in the blockchain.
In this article, we’re going to explore up to 5 applications of blockchain technology in logistics. And of course, make mention of companies that are already adopting and implementing the revolutionary technology.
Improve Efficiency of the Shipping Process
First off, blockchain technology can transform and improve freight and shipping. Yes, today’s cargo companies can harness the power of the technology to enhance the delivery process; both locally and internationally. Essentially, such companies will get to improve their capacity to track goods and make the process to be as efficient as can be.
One company that has incorporated blockchain into its operations is Maersk; the world’s largest operator of shipping containers. Moving forward, this company worked alongside Dutch Customs and US Department of Homeland Security to implement the technology in regards to the transportation of their freight across international borders. Of course, the big idea here was to use blockchain to track their cargo remotely. That’s not all — in 16th January 2018, Maersk and IBM announced their intention to form a joint venture that’s geared towards using blockchain technology to improve global trade.
Essentially, the system is expected to replace the current logistic process and reduce the overall expenditure involved in cargo transportation. Fewer errors and better delivery times are great advantages that are also worth mentioning!
Ever given thought to why inventory tracking receives lots of attention in the business world? Well, it’s only because most companies spend huge amounts of money on inventory. So of course, it’s only normal to know where it resides at any given point in time. The good news? Blockchain technology can also help businesses monitor their products in a highly efficient manner. And even better, they can do it at micro levels.
Today, several leading food retailers have teamed up with IBM to build a blockchain-based system that supports tracking of food items. Some notable companies in the alliance include Unilever, Nestle, Walmart and more. Speaking of which, Walmart has used blockchain technology to track both pork (China) and mangoes (Mexico) back to the farm. For those who might not be aware, food (especially fruits) tracking can help businesses and consumers alike. In essence, companies will be able to identify infected batches and destroy accordingly. So yes, they won’t have to get rid of the entire stock and consumers will be safe — the perfect win-win.
As mentioned earlier, blockchain technology can help improve supply chain transparency and of course, tackle the issue of integrity and credibility. At this point, our focus is on the challenge of knowing if the business information is “actually” trustworthy and reliable. And yes, this is a pretty big issue plaguing today’s supply chains.
Perhaps the biggest advantage of this revolutionary technology for transparency is that it’ll help build trust between companies. For the most part, B2B logistics will get to enjoy improved visibility and credibility, both of which are great for business. What’s more, blockchain systems will minimize invoice disputes, cut auditing costs and most importantly, prevent the exploitation of workers at ground level.
Any company implementing blockchain technology in this regard? Well, of course, there is! For the most part, Provenance has conducted several case studies with regards to supply chains based on the blockchain. The company teamed up with an international brand that had an interest in importing coconuts from Indonesia. For the most part, Provenance developed a system that made sure farmers got fair compensation for their efforts. What’s more, the system holds companies responsible for their claims and ensure that consumers are not left in the dark whatsoever. All in all, provenance is using blockchain systems to make logistics to be as transparent as can be.
Invoicing and Payments
Yes, this is yet another challenge in today’s logistics industry — in fact, it’s a pretty big one. Today, many companies find it hard to develop efficient and secure systems for invoicing and payments. But of course, the good news is, blockchain technology can provide a solution to the problem. And yes, we’re talking about processing payments via smart contracts — super efficient, transparent and error-free.
Moving forward, Tallysticks (an international trade solution) has built a blockchain-based platform that can process invoicing and payments for logistics and other businesses. As you probably guessed, the platform uses smart contracts to approve a payment that corresponds to an invoice. It’s also good to mention that the Global credit card giant Visa has also launched its blockchain-based B2B payments service. Yes, blockchain is truly the wave of the future!
Let’s face it; dispute resolution is one of the biggest challenges in cargo transportation. Of course, at this point, our core focus is on delayed or misplaced goods. As most of us know, this problem can take a heavy toll on companies. And most times, they may actually need to seek external help to iron things out.
Well, the good news is, the American multinational courier delivery service FedEx has implemented a solution that’s geared towards using blockchain to settle customer disputes. For the most part, FedEx will keep all parties in the know so as to ensure easier dispute resolution. In essence, the sender and receiver will be aware of the process before pickup and after delivery. And should any dispute arise, the third party or better still, independent auditors will no longer be called for resolution. FedEx’s blockchain-based ledger is enough to fix things!
So there you have it! With all that has been said, you can tell that blockchain technology is set to revolutionize the logistics industry. From inventory tracking to processing payments to transparency to dispute resolution, blockchain technology is clearly a game changer for supply chain management. The future of logistics is here!