Ever heard of blockchain technology? How about Bitcoin? Blockchain is the latest hype in the supply chain and freight forwarding industry - with good reason.
What is Blockchain technology?
Blockchain is a shared ledger that holds records of digital transactions in such a way that makes them accessible and visible to multiple participants in a network, while keeping them secure. The digital shared ledger is updated and validated with each transaction, resulting in a secure, permanently recorded exchange. The result is faster, permissioned and auditable B2B interactions between parties such as buyers, sellers and logistics providers.
How can blockchain technology benefit the freight forwarding industry?
A key benefit of blockchain for supply chain networks is that it establishes a shared, secure record of information flows; a ‘shared version of events’ across networks for supply chain transactions, processes and partners.
One of the key benefits of blockchain technologies is in the immutability of the data in the chain. If the genesis block was created with trustworthy data, and each additional transaction is validated by network consensus, then in theory the current state of the chain can be trusted…. establishing a high level of data integrity, thereby making data trusted, available, secure, and compliant for everyone connected to the blockchain network.
In one projected pilot by a company called T-Mining, the blockchain will give clearance for personnel – like a truck driver – to pick up a load. One of the key advantages of blockchain is that it is much, much more secure than traditional IT solutions. A relatively recent trend in logistics is fictitious pickups. These occur when con artists show up at a shipper’s dock, provide fabricated insurance documents, DOT numbers for trucks, and pickup documentation. It is argued that blockchain could help prevent these kinds of thefts.
The ‘shared version of events’ also enables improved supply chain efficiencies, better multi-party collaboration, and streamlined resolution processes when exceptions or disputes occur.
What's the haps with blockchain technology now?
In logistics, the best known blockchain pilot program involved Maersk and IBM. It centered on creating a digital distributed ledger to create a single electronic place where all the myriad documents related to a shipment could be housed.
Harry Forbes, a Research Director at ARC Advisory Group, points out that there are several challenges associated with maturing this technology for supply chain purposes:
- The technological talent is scarce and expensive; much of it has been scooped up by fintech startup firms.
- There are network effects associated with deriving value from blockchain in logistics. The more entities that participate, the more valuable the solution is. But this network effect makes things difficult at the start.
- It is likely that to get to scale, large companies will need to require their supply chain partners to participate. But this could hinder the drive to create the necessary standards. Further, while several organizations are seeking to play the necessary role of standards body; none has yet achieved the necessary scale.
- “Miners” are used to validate that the data added to a blockchain is valid. With Bitcoin, this process can take several minutes. There are supply chain processes where less latency would be very desirable.
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Whale Logistics are Australia’s leading Freight Forwarder and Logistics company located in Sydney and Melbourne. We deliver digital-focused freight forwarding services such as Australian customs parcel tracking, parcel delivery box, and comprehensive ocean, air and road freight solutions. For cost competitive and innovative freight forwarding solutions, or if you want to get in touch with one of our Customer Success Managers, drop us a line and we will be in touch shortly.