The market size of the transportation and logistics industry has been projected to reach over $12 billion by 2027. This would never have been possible without the use of the up-and-coming technologies that have been helping this industry to stay up-to-date. For example, blockchain technology is taking the supply chain industry by storm. While multinationals like IBM are experimenting with software based on this technology, companies in this sector have started to see the benefits of blockchain in transportation and logistics. Blockchain can help to boost the security of information, enhance transparency, drive efficiency, lower cost, prevent inaccuracies and much more. The multinationals in this sector have already started implementing this technology to experience unforeseen advantages.
Keep reading this post to find out how the use of blockchain is transforming the supply chain industry.
The use of blockchain in the supply chain industry
Blockchain technology is driving innovations in the transportation and logistics industry. It has the potential to boost transparency in the supply chain, reduce risk, drive productivity and improve the overall management process. This technology comes with a network that is not centralized. This allows for easy communications between peers and smooth execution of transactions with increased transparency and security. Logistics is one of those sectors that is fraught with contingencies and ‘what if’ scenarios. In addition, the logistics industry has to count on tonnes of paperwork. This process of completing the paperwork also tends to slow down the logistical processes. The freight forwarding industry needs to focus on efficacy rather than spending time deciding the best course of action. This is precisely what blockchain technology is helping this industry to achieve.
More efficient processes
Simply put, blockchain is helping this industry to solve its inadequacies. Moreover, the absence of a single data source further slows down and complicates the process. This industry needs a decentralized entity like blockchain that can manage all the transactions while also functioning as a center for authenticating and enhancing the entire process. It can tackle every aspect of logistics management such as recording of transactions, the creation of a highly transparent system, and even tracking of assets with all the necessary paperwork. Additionally, it provides every stakeholder easy access to whichever data or paperwork they are looking for.
Enhanced financial security
Blockchain enables shipping companies to make use of several IoT sensor data from the carrier. This information could include the condition of the vessel, the route, its location, etc for instant filing of paperwork, custom duties, audits, payments and other purposes. Most importantly, this technology can improve international B2B payments more effortless and secure. By improving the visibility of the transaction, blockchain also helps to lower the lead time and make the process absolutely seamless and free of manual errors.
Faster port clearance
Shanghai port, the busiest international port of our time is partnering with Ideanomics to implement blockchain for facilitating its online port clearance process. To quote the CEO of Ideanomics, “We are excited to deliver a never seen before intelligent supply chain management platform driven by blockchain and super artificial intelligence technology. We will integrate business data from various partners, establishing a risk control model in cooperation with a single window to provide risk control services for regulatory authorities and enterprises.” The goal of the project is increased risk control and greater connectivity among the ports which in turn will reduce the transit time of the cargo.
Creation of the Electronic Bill of Lading
CargoX, a blockchain empowered platform for instant document transactions has been experimenting with this technology to create a paperless Bill of Lading. The Electronic Bill of Lading uses blockchain technology for an unchangeable audit trail, visibility of all the important business events during the cargo’s journey, and absolute confidentiality among the stakeholders of the shipment. Blockchain empowered Bill of Lading which will become the norm in the future will come with all the features of the paper B/L but with greater security features and improved auditability.
Enhanced visibility and elimination of paperwork
Some of the top shipping companies are investing in the commercialization of blockchain to potentially achieve paperless transactions, promote collaboration and reduce friction among competitors. Maersk partnered with IBM to create the Tradelens- a blockchain enabled digital shipping platform. It helps to join several stakeholders in this industry including shipment owners, inland and sea carriers, logistics service providers, port and terminal authorities, customs authorities, freight forwarders, and more. Additionally, it constantly develops services and applications that can be seamlessly integrated with the platform. Prominent names in the container shipping industry such as Hapag Lloyd, ONE, CMA CGM and Mediterranean Shipping Company have already integrated with the TradeLens platform.
Creation of smart contracts
Settling an invoice is a time consuming process in the logistics industry. On average, freight forwarders take more than a month to settle an invoice. It goes without saying that this leads to a waste of considerable time and resources. Smart contracts are blockchain-enabled solutions that lead to automated lawful agreements among all the stakeholders in the chain. They come with all the required data involving funds. The smart contracts will allow you to release the funds only after verifying the documents that prove the delivery of the cargo. In other words, it eliminates the process of manual release of funds from time to time while the shipments move through the supply chain. Furthermore, it lowers the risk of one party failing to fulfill their side of the agreement.