Logistics Industry: Next Step to Global Economy’s Blockchainization
Logistics Industry: Next Step to Global Economy’s Blockchainization
The writing’s on the wall for legacy logistics companies: Blockchain is taking over.
There is a fresh addition to the list of industries that are being conquered by the unpreventable advance of the Blockchain. Today, it is steadily permeating the logistics sphere, which seems to be a ideal fit for the technology. This year we have witnessed the market signaling rising interest to how Blockchain can switch the logistics and transportation industries.
Logistics and Blockchain: a flawless match
Blockchain, the underlying technology of Bitcoin, is in essence a very secure and effective way to share information inbetween parties. It creates an immutable digital ledger of transactions which is maintained by a distributed network of computers.
The sharing potential of this technology, it’s tamper-proof architecture and total transparency makes it a ideal instrument to revolutionize the way we treat supply chains today.
Logistics is defined as a planning framework for the management of material, service and information flows. The logistics of physical commodities usually involves the integration of information flow, transportation, warehousing and often security.
Logistic chains often span numerous steps and hundreds of geographical locations. Understandably, this makes it increasingly firmer to trace events in the entire chain, verify and validate the goods being transported and quickly react to unforeseen circumstances.
Moreover, due to the lack of transparency, it becomes enormously difficult to investigate illicit activities happening anywhere along the line.
Blockchain possesses the potential to solve all the aforementioned issues. Being a see-through public ledger, it will provide customers and auditors alike with ordinary and effective devices for tracing the entire journey a product took before arriving at its final destination. One crucial aspect of Blockchain is that it can only provide its total benefits if all members of the logistic chain have access to the network.
Other than tackling industry-specific issues, Blockchain brings to the table the usual package of instant benefits. Not only does it eliminate the unnecessary intermediaries and greatly reduces the workflow volume, but it also offers the fabled Blockchain security, reducing errors, preventing mislabeling of illicit goods and other fraud attempts.
As a resulting bonus, this fresh paradigm promises phat potential cost-saving advantages for the industry.
To this day, a number of efforts to integrate Blockchain into the logistics industry have been made.
Real world implementation: it’s happening!
In October 2016, the Commonwealth Bank of Australia and Wells Fargo – both members of the R3 consortium – have undertaken the very first global trade transaction using technologies of Blockchain and wise contracts.
The transaction involved a $35,000 shipment of cotton from Texas, US to Qingdao, China and commenced successfully yet the project did not see rapid further development. The banks were evidently optimistic about the fresh technology but admitted that are not yet ready to go “utter Blockchain.” As Chris Lewis, trade services manager for Wells Fargo, noted, "significant regulatory, legal and other concerns remain to be addressed."
Shortly after, a similar project was undertaken by the Port of Rotterdam, one of Europe’s largest shipping ports. The endeavor garnered support from a score of organizations and universities in the Netherlands and is scheduled for an extensive testing period for the next two years.
Corporations are also testing the waters. Maersk, the Danish shipping giant, had been investigating the ways to digitalize workflow and manage the company’s cargo more effectively and transparently.
In collaboration with IBM, Maersk is now researching its own unique implementation of the Blockchain technology relying on the Hyperledger Fabric framework, which will permit to track millions of container journeys per year and better integrate with customs authorities.
The largest US retail company Walmart is also employing Hyperledger Fabric, a Blockchain framework hosted by The Linux Foundation, in its pilot project of distributed ledger technology that will track the origin of pork in China and its transportation and warehousing in the US.
Numerous other corporations (Amazon, Alibaba, Kestrel, etc.) have already shown interest in using Blockchain for their logistic needs. Yet remarkably this scene has been fairly empty when it came to publically funded startups. Only two such projects of note have popped up, the very first being Blockfreight and the 2nd A2B.
Blockfreight is an Australian-based company, founded by the industry veterans, that deals with container transportation and related activities. Essential features of Blockfreight are brainy contracts build on the Ethereum blockchain and a tradeable token BFT:XCP, which will be used for all transactions within the Blockfreight network. This will permit the platform to track all shipping data and prevent fraud.
The threshold of Blockfreight’s crowdsale was set at a modest target of $1.9 mln with tokens being sold in several consecutive rounds. Today, being more than a year into development, the project is still very much in the experimental research and development stage. So far the work has not gone past system design and research of the underlying technology.
The other startup, Eastern European company A2B, is mostly involved with logistics markets of Ukraine and Belorussia. A2B is a service that provides direct communication inbetween cargo owners and freight forwarding agents, treating most of the workflow volume while eschewing forwarding expenses.
Its fresh logistic model will not be built from scrape, but will rather be designed as a synthesis of an already existing and fully operational A2B Direct platform and Blockchain technology. Founders expect this stir to enable cheaper and lighter international transportation and permit businesses and customers to use both fiat and cryptocurrencies.
The platform’s ICO comes July 12th and will last a month. A2B seeks to raise €0.Five to €Three mln, with higher totals permitting the company to expand to Western European and American markets.
The path ahead is clear
As a means to global unhindered and semitransparent commodity circulation, the transportation and logistics industries are the vascular system of global trade. Like any other old industry, they are ridden with issues and the revolutionary paradigm of Blockchain is one way to solve many of them.
Introducing Blockchain and wise contracts into logistics potentially offers real-time cargo traceability, diminished workflow and enhanced transparency. Once built, Blockchain proves to be a much cheaper and safer infrastructure with higher scalability and ease of integration with other industries.
Adoption of Blockchain in logistics may not be adequately consistent at present because of perceived risks and skepticism, but with every successful project the future draws nearer and we can securely surmise that in several years Blockchain will spread across the industry like wildfire.