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Growth of freight volume further complicates the trucking industry. This mandates the need of a robust logistics management system. As it impacts the bottom line of any transportation company. The transport sector is still grappling with issues due to outdated infrastructure and paucity of investment. Inculcating blockchain technology will enhance the working of the trucking, logistics and freight industry.
What is Blockchain Technology
Blockchain in simplest terms is a distributed database existing on multiple computers at the same time.
It constantly grows as new sets of records, or 'blocks', are added to it. And each block holds a cryptographic hash of the previous block, a timestamp and a link to the previous block, so they actually form a chain.
Each transaction is digitally endorsed to ensure its authenticity and that it isn't tampered with, so the ledger and the existing transaction within it are of high integrity.
Bitcoin and other cryptocurrencies are popular usages of blockchain technology, this "Distributed Ledger Technology" (DLT) has a wide range of use.
Database requires a central authority to maintain and manage data, while blockchain offers a decentralised approach to storage of data and its verification.
Greater transparency
Enhanced security
Improved traceability.
Increased efficiency and speed.
Reduced costs.
Related Resource: BlackBuck's successful uberization of freight and trucking business in India
Blockchain and Transportation
The above given benefits of the blockchain technology are very much the need of the hour for the transportation industry. We have seen that the trucking industry handles a chunk of the goods being transported, which gives the much needed push for industries to thrive. How this comes to fruition is elucidated below.
Timely payment issues, administrative inefficiency, and freight tracking are major issues that plague the industry. Close to $65 million is tied up in disputes / delayed payments. The clearance of an invoice takes 45 days after delivery of goods.
Processing and administrative costs have risen to as high as 20%, due to paper transactions. A lost form or delayed approval could hold up a container indefinitely, or be lost for good.
Sensitive pharmaceutical or food shipments experience temperature deviations due to which these products never make it past customs.
More than 90% of trucking companies have lesser than ten trucks, this causes coordinating issues between customers and providers. Due to this truckers run with partial or empty truckloads, adding upto 45 million miles per year.
Automated freight transport through IoT, AI and Blockchain - from CEO and founder of RoadLaunch
Benefits of Blockchain in Logistics
- In the transport industry one of the biggest grouse is tracking shipments. By using the blockchain for data authentication, the entire network can contribute and validate data, and its no longer subject to tampering.
- Increased tracking information can have a positive impact on the conservation of goods being transported.
- Refrigerated and temperature controlled logistics rely on timely deliveries. The use of blockchain in logistics assures to bring in efficiency, transparency, and authenticity to food-chain-supplies around the world.
- Volume transported defines the cost of transporting freight. By using IoT sensors in trucks and vehicles, transportation companies can identify thespace used in a shipment and determine cost, which then can be communicated using blockchain.
- With the use of blockchain enabled IoT sensors, air freight containers for refrigerated pharmaceuticals can monitor temperature, humidity and location.
- Blockchain technology maintains integrity of the product being transported as well as creates immutable, secure record of all documentation throughout the process.
- Global shipments undergo numerous checkpoints and are handled by various agencies along the way, having this type of data on a secure, accurate record is a huge advantage for transporters.
Blockchain in logistics will enhance efficient working of the industry and should remove all previous bottle-necks for improved profit-margins.
- The importance of tracking is also applicable to performance of vehicles. When a transporter wants to purchase a second hand vehicle, blockchain can help authenticate information on the past performance of the vehicle and its maintenance history.
- Placing all records of parts used on vehicle, on a secure, immutable ledger, helps in a better standardised and reliable way to evaluate pricing and other factors inherent in purchasing can be reached.
- Transporters try to reach the maximum capacity of all trucks to optimise revenue. But can't move forward until the carrier's loading capacity has been authenticated.
- Blockchain Logistics can solve this by creating a decentralised network that has records of all carriers across the transportation industry. This information would be impossible to falsify and would be reliable.
- Many transportation companies are wary of agency data as it can get falsified or duplicated, providing an unreliable representation of demand.
- With blockchain, agencies can post timestamped loads that are recorded and verified by the decentralised network. Hence, a particular load cannot be duplicated and the data will maintain its integrity.
- Because blockchain logistics can authenticate load data, prevent duplication, and make it visible to agencies and transporters alike
- On time payments is by far the most effective impact of blockchain in logistics.
- Self-executing tasks are coded through blockchain to be executed when a certain pre-condition is met.
- When a transporter demands full payment as and when the freight reaches its destination, a customer can program to auto-pay the transporter a certain percentage when the freight reaches a specific location.
- Transportation industry's reliance on paper-based system is prone to errors because of the probability to loss and fraud.
- Blockchain technology can eliminate that element, thereby cutting costs and virtually removing all possibilities for error.
- Administrative costs makeup 20% of the overall costs of transportation, hence the amount of money saved by using blockchain in logistics is effectively staggering.