Blockchain In Logistics: Top 10 Efficiencies Gained

Industry issues that led to the blockchain adoption

A person analyzing global shipping routes

Blockchain in trucking and commercial transportation pledges to create document and transaction transparency across the freight landscape, enhancing the efficiency, agility, and innovation capacity of supply chains. Blockchain has inherited security features that separate it from traditional IT systems used in logistics. As such, blockchain has great potential to solve many pain points in the freight and delivery sectors.

Payment delays and disputes

According to a recent transportation industry report, around US$ 140 billion a day is held up due to payment disputes. Companies suffer long delays receiving payments, sometimes as much as 42 days. Such delays and disputes cause millions of dollars of capital to be blocked, which could have been utilized for service improvements.

High processing and administration costs

In the logistics industry, the excessive reliance on paper transactions introduces very high processing and administration costs. In one study, IBM and Maersk tracked a shipping container of flowers from Mombasa in Kenya to Rotterdam in Holland. The main finding of the study was that even this simple refrigerated shipment went through 30 different organizations and required over 200 separate communications.

Staying in the right temperature range is not easy

Many sensitive global pharmaceutical shipments experience temperature deviations. Due to these deviations, many valuable biopharmaceutical products never make it past customs, as they exceed acceptable temperature ranges, resulting in wasted transportation costs, additional administrative inefficiency, and in most cases, a loss of the product itself. It is estimated by IQVIA Institute for Human Data Science that the pharmaceutical industry loses $35 billion annually due to broken temperature requirements while shipping.

Less-than-truckload (LTL) shipping

Matching shippers with carriers is a difficult task in logistics because most companies only have six or fewer trucks. This situation results in truckers driving billions of miles every year with partial or empty truckloads, creating losses of millions of dollars on a yearly basis. It also raises shipping costs for consumers.

The statistics show that generally truckers in the US drive an estimated 140 billion miles per year.

Opportunities blockchain brings to the trucking industry

Logistics companies depend on their ability to adapt to changing consumer needs and implement new technologies. Blockchain in logistics and trucking is an emerging technology which promises to lower shipping costs and eliminate inefficiencies. Blockchain can solve decades-old industry issues such as long dispute resolution processes, low administrative efficiency, and poor and insecure order tracking. It is predicted that the blockchain technology market in logistics and transportation will cost up to $889 million in 2025.

Improving efficiency

Blockchain technology is set to revolutionize many industries. Freight and shipping companies can benefit from blockchain to improve their delivery processes. A more effective method of tracking goods could significantly boost productivity levels. Blockchain improves supply chains by enabling faster and more cost-efficient delivery. It also enhances the traceability of goods, enables better communication between partners, and, most importantly, eases access to monetary resources. Due to its decentralized nature, blockchain removes the need for intermediaries in payment processes. Unlike traditional financial services, blockchain facilitates faster transactions by allowing P2P cross-border transfers with a digital currency.

Immutability and security

Blockchain helps companies track the exchange of products along the supply chain. After the successful exchange of goods and settlement of smart contracts, the data enters the public or private blockchain together with algorithmic signatures that are very difficult or impossible to change. To accomplish this, blockchain uses hash functions that can be seen as unique mathematical data fingerprints. Supply chain transaction data is stored along with information on authors and time stamps. Everybody with access to the blockchain can track this information and it can even be shared with customers to increase end-user transparency.

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