Is blockchain the future of logistics visibility?

Oct. 16, 2017
Blockchain, one of the technologies that helps enable Bitcoin and other digital or crypto-currencies, is being embraced by logistics companies as a way to improve efficiency and security in the supply chain.

Blockchain, one of the technologies that helps enable Bitcoin and other digital or crypto-currencies, is being embraced by logistics companies as a way to improve efficiency and security in the supply chain.

Big companies like Maersk and IBM already are testing the technology, and a new pilot by Marine Transport International (MTI) may help propel it into the mainstream.

MTI worked with Agility Sciences on testing the Container Streams system in a supply chain environment, and results of the test were verified by the University of Copenhagen and the maritime technology leads at Blockchain Labs for Open Collaboration (BLOC).

Another endorsement of the technology came from IoT/fleet tracking solution provider Fleet Complete, which joined the Blockchain in Trucking Alliance (BiTA), a consortium for adoption of the solution in the trucking industry. According to the company, blockchain can enable self-executing transactions and improved transparency, immediate payments to drivers upon delivery, self-directing fuel and maintenance payments, automated settlements, and better documentation.

"Joining BiTA was a natural decision for us," says Tony Lourakis, CEO of Fleet Complete. "We are passionate about making complicated business operations simple and easy for our customers through innovative technologies and industry leading customer support. BiTA's goal to facilitate the adoption of blockchain transactions in trucking coincides with our objectives. We believe our customers and partners will benefit from this collaboration, which will bring powerful fleet management innovations."

Blockchain can help automate data flows between supply chain partners. The MTI pilot connected a supplier, shipper, load point, customs, and terminal on a shared blockchain ledger. Container Streams allows interoperability with existing legacy infrastructure, so users don’t have to invest in new solutions or remove existing technology.

“The results of this successful pilot demonstrate the strengths of blockchain technology when deployed to link the various actors in the supply chain,” says Jody Cleworth, CEO of MTI. “We are confident that firms throughout the logistics industry will see a broad spectrum of benefits stemming from blockchain deployment.”

“We have documented the first phase of this use case, its implications for the maritime industry and the resulting development of a turn-key application ecosystem for global supply chain logistics,” says Deanna MacDonald, CEO of Blockchain Labs for Open Collaboration. “However, the future potential of this ecosystem platform will rest upon collaboration from the different actors in these supply chains in order to clearly identify the problems and co-create applications that solve for the collective challenges they are facing today.”

According to Cleworth, blockchain represents a good way to connect different stakeholders because it provides transparency and “security-by-design.” This can help prevent the types of industrial cyberattacks that have recently plagued large shipping and logistics companies.

Maersk – a high profile victim of just such an attack –also has piloted blockchain. Working with IBM, Maersk created a digital distributed ledge – a single electronic system where all shipping documents can reside.

The solution IBM and Maersk tested will be available to other shipping and logistics companies, and will help track documentation of potentially tens of millions of shipping containers.

According to IBM: “The solution is designed to help reduce fraud and errors, reduce the time products spend in the transit and shipping process, improve inventory management and ultimately reduce waste and cost.”

Costs associated with trade documentation processing can amount to up to one-fifth of the cost to transport goods. Blockchain improves this by providing each participant end-to-end visibility based on permissions levels. Stakeholders can also see the status of shipping documents.

In order to modify or delete a record, all parties have to have consensus on the change. This can help reduce fraud and errors and save time in the shipping process by eliminating document-related delays.

For shippers, this type of solution could help reduce trade documentation and processing costs and eliminate delays and paperwork errors. Customs authorities would also have better visibility into potential shipping risks, which would make border inspections and clearances more efficient.

"We believe that this new supply chain solution will be a transformative technology with the potential to completely disrupt and change the way global trade is done," says Bridget van Kralingen, senior vice president, Industry Platforms, IBM. "Working closely with Maersk for years, we've long understood the challenges facing the supply chain and logistics industry and quickly recognized the opportunity for blockchain to potentially provide massive savings when used broadly across the ocean shipping industry ecosystem.”

Maersk, Microsoft and accounting firm EY also plan to launch a blockchain platform for marine insurance.

Blockchain not only enables automation, but is also much more secure than other types of solutions.

“A blockchain-enabled supply chain is highly resilient to cyberattack – a copy of the essential shipping data is stored on each node on a decentralized network, meaning that even if one node is compromised, the data is safe nevertheless,” Cleworth says. “The business case for connecting supply chains using blockchain is very strong. As the interface is easily adaptable to existing systems there is a very low barrier to entry.  Any type of supply chain business, be it marine-, air-, or land-based, can take advantage of such a system – the cost savings that we envisage are as high as 90 percent, as a result of substantially streamlined processes.”

A number of other companies are also working on blockchain-enabled solutions. Kouvala Innovation has developed a system that uses RFID tags to communicate shipping requirements to carriers that would then bid on the move, and blockchain would track the shipment.

Colombian company AOS is also creating a solution based on IBM blockchain and the Watson artificial intelligence platform. The company plans to use sensors on the truck to provide additional information about shipment location and environmental conditions, and manage the entire shipment process via blockchain.

Samsung SDS also piloted blockchain in Korea, and South Korean firm Hyundai Merchant Marine completed its first blockchain pilot on a container vessel. The Port Authority of Singapore and shipping company PIL have also piloted blockchain with IBM, as has the government of Dubai.

The Chain Federation of Logistics & Purchasing also has launched a Blockchain Application Sub-Committee. Participants there believe that blockchain could even help streamline credit processes for small and mid-size companies that sometimes struggle with capitalization.

Blockchain could also help provide product authentication and make it harder for counterfeit goods to enter the supply chain.

There are some obstacles to widespread blockchain adoption. There aren’t many qualified blockchain experts and in order for these systems to scale, large manufacturers would have to mandate the solution to their trading partners. There also are latency issues with data validation.

Subscribe to Aftermarket Business World and receive articles like this every month….absolutely free. Click here.

Sponsored Recommendations

ZEUS+: The Cutting-Edge Diagnostic Solution for Smart, Fast, and Efficient Auto Repairs

The new ZEUS+ simplifies your diagnostic process and guides you through the right repair, avoiding unnecessary steps along the way. It gives you the software coverage, processing...

Diagnostic Pre- and Post-scan Reports are Solid Gold for Profitability

The following article highlights the significance of pre-scans and post-scans, particularly with Snap-on scan tools, showcasing their efficiency in diagnosing issues and preventing...

Unlock Precision and Certainty: TRITON-D10 Webinar Training for Advanced Vehicle Diagnostics

The TRITON-D10 lets you dig deep into the systems of a vehicle and evaluate performance with comparative data, systematically eliminating the unnecessary to provide you with only...

APOLLO-D9: Trustworthy Diagnostics for Precision Repairs

The APOLLO-D9 provides the diagnostic information and resources you need to get the job done. No more hunting through forums or endlessly searching to find the right answers. ...

Voice Your Opinion!

To join the conversation, and become an exclusive member of Vehicle Service Pros, create an account today!