It was only a matter of time until blockchain hit the logistics mainstream. The technology’s ability to record transactions between parties permanently and securely has a multitude of uses in logistics which are only now starting to be realized. But blockchain is being realized and in a major way by some of the world’s largest companies including Maersk, Microsoft, Alibaba, and Amazon. That’s a lot of money getting in on the blockchain action, and why wouldn’t they? The World Economic Forum estimates the integration of blockchain reduces the supply chain barriers to trade, giving businesses the potential to increase sales by almost 15 percent and increase the global gross domestic product (GDP) by 5 percent.
Perhaps the most exciting part of the tech up-take is that blockchain solutions are tailored to each company: any business can use the tech in a way which best suits their needs. Startups are stepping into this blockchain revolution to fundamentally change how logistics companies operate. Transmetrics, together with BitFortune, have gathered the most interesting examples of blockchain projects in logistics and supply chain:
The big players
Retail chain Walmart is using blockchain to focus on food safety, tracking, and traceability. For example, the company is already carrying out tests using the tech to track food products like mangoes from Mexico and pork from China. The system uses sensors to record temperature in a blockchain system. In this way, the company can assure quality and food condition during transit. Unilever, Nestlé, and Dole are also using similar methods. The tech makes it much easier to track down problems. Last year, it took two months for experts to trace the source of a salmonella outbreak in Mexican papayas. With blockchain, this process is reduced to seconds.
Meanwhile, the world’s largest retailer is also incorporating technologies based on the blockchain. Lynx, a subsidiary of Chinese e-commerce giant Alibaba, announced the successful integration of blockchain for its cross-border logistics operations. Their system is capable of keeping track of all the relevant data about an imported shipment such as the details about the production, transport method, customs, inspection and even third-party verification.
Microsoft is also getting in on the action. The tech giant partnered with Adents, a supply tracking solution provider, to develop a new product – tracking platform using blockchain technology and artificial intelligence last month. The new solution, called Adents NovaTrack, boasts end-to-end traceability and visibility from the point of origin along the whole supply chain, allowing users to trace single product items within a case. Initially designed for the pharmaceutical industry in order to fight distribution of fraudulent copies of drugs, the developers are reportedly targeting other high-value industries.
But what about the smaller companies? Well, arguably it is them – the startups – who are at the forefront of this blockchain revolution. They are the players harnessing the tech to its full potential for larger companies to then use. Take for instance Zerv. In May, Californian startup Citizens Reserve announced the launch of the permission-based blockchain protocol Zerv which aimed to become an “operating system for the supply chain”. The network, enabled by an asset-based token, seeks to provide frictionless transactions between all key participants within the supply chain, including manufacturers, suppliers, distributors, retailers, and consumers.
The automation of commercial processes is also getting a revamp thanks to the startup Libelli. The company is developing a blockchain system to act as an escrow agent between buyers and sellers. This system creates a smart contract system which bypasses the need for other parties like banks and eliminates the traditional letter of credit paperwork. Libelli claims these streamlined processes cost ten times lower than current rates charged by banks. Most inefficiencies in logistics and supply chains, especially in product traceability, supplier payments, transportation and contract bids, can now be unlocked by services like Libelli.
Another startup, OriginTrail brings trusted data sharing to global supply chains by utilizing blockchain technology. The supply chain is often presented as one of the best use cases for blockchain, but the current decentralized solutions cannot provide the needed level of performance, scalability and efficiency in supply chains. Since 2014, OriginTrail’s protocol is solving this challenge with a trusted decentralized network and has already succeeded in joint projects with BTC Company and the Chinese online food marketplace Yimishiji.
And don’t forget about ShipChain, a startup set out to design a comprehensive blockchain-based tracking system. The system tracks products from the moment they leave the factory’s door to when they are delivered to the customer’s door. Relevant information emanating from all stages in the supply chain is recorded in a blockchain based system. The system can then execute smart contracts once set conditions are met. For instance, once a driver from a delivery firm has confirmed a successful delivery, the system can automatically mark the item as done and assign a new duty to the driver.
From ship to shop
Shipping is the best example of where blockchain possibilities are being realized. There are more than 50,000 merchant ships involved in the global shipping industry and multiple customs authorities regulating the passage of freight, so this industry has become a major area of focus for efficiency gains through blockchain. For example, Israeli container shipping company ZIM is testing how to digitize the bill of lading: an essential shipping document which holds critical information like destination, product description, quantity, and handling. The project teamed up with Sparx Logistics and Wave Ltd to successfully complete the pilot run.
During the trial, which was hailed as a ‘holy grail’ blockchain application in logistics, participants issued, received, and transferred bills of lading through a blockchain system. Containers being shipped from China to Canada used the Wave application to issue, transfer, endorse and manage shipping and trade-related documents through a secure decentralized network. The application is free for shippers, importers, and traders. The containers were delivered to their destination without any issues.
“First, logistics companies need to digitize, standardize, and cleanse their data. Then, once an industry-wide standard is implemented, companies must form an ecosystem of supply chain partners who would use the standard in a shared, permissionless blockchain environment.”
The adoption of blockchain-based digital lading bills will enable accurate documentation and fast transfer of original documents. This will make the supply chains more efficient and reduce unnecessary transaction costs. According to industry estimates, more than 10% of freight invoices contain inaccurate data: this is the type of inefficiency ZIM aims to amend.
Also, consider the partnership of Maersk and IBM. The two giants have combined to streamline ocean freight with a blockchain system which tracks international cargo in real-time. It is predicted the partnership will soon track millions of shipping consignments annually, reducing fraud and delay in the process to save billions of dollars. Lastly, another blockchain-based partnership to recognize is that of the Port of Rotterdam and CargoLedger. They aim to track shiploads to improve quality control in supply chains and establish a transparent, secure system to innovate the cargo management and handling.
So if the blockchain revolution is as good as it seems, why isn’t everyone doing it? Well, progress doesn’t happen overnight. Just as the internet eventually overthrew the intranet as the main technology, permissionless blockchains will do the same. But there are still a few steps required for logistics companies to completely adopt the new way. First, logistics companies need to digitize, standardize, and cleanse their data. Then, once an industry-wide standard is implemented, companies must form an ecosystem of supply chain partners who would use the standard in a shared, permissionless blockchain environment. However, the argument to adopt blockchain nay-sayers is simple: it brings much-needed reliability to data in the supply chain, saving time and money for everybody.