Will you benefit if logistics companies start using blockchains?
D o you know how many stakeholders are involved in your average international trade transaction and how complex the flow of information is?
A simple transaction has about 10 parties involved, including the exporter’s bank, the forwarder, the carrier, and the import port – and has just as many different lines of communication that need to be activated in order for the transaction to be completed.
That’s just one transaction. There are millions of different companies involved in billions of transactions dealing with trillions of dollars, which makes the world of logistics incredibly complicated, confusing, and difficult to keep track of for the different stakeholders involved. As a result, companies incur significant expenses to keep a track of their business operations.
According to a new report by DHL and Accenture, blockchain has the power to change all that:
Blockchain can potentially help to overcome these frictions in logistics and realize substantial gains in logistics.
This technology can also enable data transparency and access among relevant supply chain stakeholders, creating a single source of truth.
In addition, the trust that is required between stakeholders to share information is enhanced by the intrinsic security mechanisms of blockchain technology.
Furthermore, blockchain can achieve cost savings by powering leaner, more automated, and error-free processes.
Blockchain can also add visibility and predictability to logistics operations and accelerate the physical flow of goods. enabling provenance tracking of goods. This can fuel responsible and sustainable supply chains at scale and help to tackle product counterfeiting.
Finally, DHL believes, blockchain-based solutions will help create new logistics services and more innovative business models.
Implications for ocean freight
When shipping lines take care of import and export of cargo, it’s usually classified as ‘ocean freight’. These are some of the most complex logistics operations in the world, especially because of the number of nations, regulations, practices, and compliances involved.
To unlock efficiency in ocean freight, Maersk and IBM have started a venture to establish a global blockchain-based system for digitizing trade workflows and end-to-end shipment tracking.
Ambitious joint venture between @ibm and @maersk creating a neutral, end-to-end solution to the complex and massive problem of global supply chain management. Impressive. #bizofblockchain #bosblockchainweek pic.twitter.com/47IG8TlXR2
— Michael Troiano (@miketrap) April 23, 2018
The system allows each stakeholder in the supply chain to view the progress of goods through the supply chain, understanding where a container is in transit.
Stakeholders can also see the status of customs documents and can view bills of lading and other data. Blockchain technology ensures secure data exchange and a tamper-proof repository for this documentation.
The two companies expect this solution to track tens of millions of shipping containers annually. It has the potential to significantly reduce delays and fraud, which could lead to billions of dollars in savings in the logistics industry.
Accenture is also working on building a blockchain-based system that is focused on replacing the traditional bill of lading and facilitating a single source of truth for all supply chain stakeholders for freight inquiries up to the issuance of trade documents.
Per the consulting giant’s solution, a decentralized network connects all parties in the supply chain and enables direct communication, eliminating the need to go through central entities and rely on intermediaries.
So, will you, the consumer, benefit?
Of course, you will benefit. For one, the cost of logistics will come down because processes and methods will be streamlined.
Next, the blockchain will also make things more transparent. Which means, if you really care, you can find out whether or not your clothes were made in a sweatshop in Bangladesh.
When shippers use blockchain ledgers, it means your pharmacy can help you track and verify the authenticity of your medication. Counterfeit medication is a significant and serious problem and causes many deaths across the globe – blockchain could immediately change that.
If these aren’t exciting enough, consumers can rest assured that other benefits will slowly begin to become apparent as stakeholders across the supply chain become integrated into the blockchain ecosystem. Blockchain will definitely make the future of logistics exciting.