The Promising Future of Logistics with the Help of Blockchain
By Mohan S Software development Enterprise Mobility March 13, 2023
Blockchain is a digital ledger of distributed databases that can be shared among the network of computers. It stores information in digital format. It is best used and known for its contribution towards cryptocurrency systems (Bitcoin). With Blockchain, you can establish a safe and decentralized record of all the transactions being made, which means it ensures loyalty amidst the parties involved as everything remains transparent and secure.
Would you like to see statistics that predict the future of supply chains?
Blockchain has the potential to revolutionize the logistics industry by providing new opportunities for collaboration, efficiency, and innovation. First, let’s take a look at the challenges faced by the logistics industry.
Current challenges the logistics industry is still facing in 2023
Economists worldwide predict that the logistics industry can face recession in the year 2023. Data Analytics and Supply Chain management can take care of many of these challenges. However, there are other factors that are causing an economic slowdown for the logistics industry. What are these challenges?
Minimizing data breaches
With the alarming increase in data breaches in 2022, cybersecurity has become a prime challenge for the logistics industry.
Companies need to actively train their employees in cybersecurity practices. A dedicated IT team to keep security services up to date should be outsourced to keep an organization safe from these attacks.
Transportation in the Logistics industry saw 186% increase in ransomware attacks in recent years, making it the 7th most affected industry from cyber-attacks. These breaches can lead to data loss and potential lawsuits from clients whose data was jeopardized.
Counteracting fuel prices
The constant price hike for fuel affects transportation industry operations. Experts believe fuel prices are not meant to go down anytime soon. In fact, we can expect them to rise even further in 2023. This can expectedly cause transportation of goods that require immediate delivery to suffer greatly. Dealing with this economic crisis can be a task for the logistics industry in 2023.
Warehouse management can be tricky considering huge inventories, lack of space, sorting diverse range of products stored in inventories, and rapidly changing inventory. Digital technologies like user-friendly databases and analytics can help the human workforce to be much more efficient and accurate with managing the warehouses.
Countering Labor Shortages
Economists foresee a global recession, which can cause a major slowdown in the labor market in 2023. During periods of recession, automation can help cut costs and mitigate downward trends.
Reducing carbon emissions
The logistics industry can set a precedent in leading the way towards greener solutions. Parcel collection-point networks is one such solution. The logistics industry can reduce the carbon emission by shortening the delivery distance with it. Investing in EVs (Electric vehicles) is another big step towards controlling pollution.
How blockchain can address logistics challenges
Blockchain in logistics was valued to be $3.3 billion in 2020. The projected reach by 2028 is estimated at $1620 billion. Blockchain can be the answer to many of the challenges the logistics industry is facing currently. By allowing all the data to be documented in a digital format and be accessed in a decentralized manner, blockchain can solve many of logistics’ challenges:
Providing transparency and traceability through a shared ledger
Blockchain enables end-to-end tracking in the supply chain, making it a transparent process. Organizations can use blockchain to digitize and decentralize their physical assets and immutable records. This can further simplify t tracking assets from production to delivery. This transparency in supply chain processes gives clarity to businesses and consumers alike.
Automating paperwork and documentation through smart contracts
Smart contracts in blockchain can be executed immediately. They are digital and automated so there is no paperwork required, thus reducing time in the process and less errors being made due to manual filing of documents.
Reducing transaction costs and delays through decentralized transactions
Blockchain provides all its participants to execute an agreement in real time. You can automate the agreement process without the interference of a third party being involved, resulting in saving time and cost.
Real-world examples of blockchain in logistics
The following companies are using blockchain to enhance and streamline their workflow:
Accenture has partnered with Mastercard and Amazon Web Services for their supply chain program. With facial recognition features, it is quicker to verify identities and make payments while tracing transactions through blockchain technology. This makes the delivery process much easier and faster.
Microsoft has its own cloud platform called Azure, which helps in detangling the logistics processes. Azure’s blockchain feature is able to track items in the supply chain, which is super helpful for sections like pharmaceutical and time-limited food companies. It also established a decentralized network amidst the financial system to enable faster payment transactions.
IBM has been working actively towards increasing the confidence in supply chain data. It has facilitated supply chain networks with blockchain technology. This initiative by IBM has distributed ledgers to create smart contracts and keep records of data. Organizations are better equipped to keep their data and information secure while giving access to concerned individuals to this data.
Oracle has a SaaS solution Intelligent Track and Trace app, which helps them streamline their blockchain experience. This supply chain application can track shipments and record data from many sources. It can check the status of products in real-time so businesses can speed up their processes, giving a broader view to the logistic operations and eventually reducing the cost involved.
Blockchain in Transport Alliance (BiTA)
The Blockchain in Transport Alliance (BiTA) was started in the form of a forum to discuss and develop plans within the logistics industry. They use it in implementing ledger technology in shipping processes. They are working on educating people on the benefits of blockchain.
Sweetbridge has been using blockchain technology to save billions of dollars stuck in payment disputes. They use blockchain for auditing ledgers in real-time and create smart contracts. Sweetbridge has their own crypto (Sweetcoin) through which they can settle disputes with a lightning speed.
Guardtime has a blockchain for maritime logistics. They are focused on resolving issues regarding inefficiency, lack of trust and transparency. Guardtime’s digital ledger has smart encrypted contracts, enabling them to decentralize shipment tracking and verify data with speed. This means less time consumed and certain protection from data theft.
Blockfreight is the first end-to-end blockchain solution for the cargo shipping industry. It uses blockchain technology in creating smart contracts for secure billing and shipping processes. Blockfreight’s blockchain technology validates business transactions before they can be posted on the blockchain. Keeping the decentralized data safe and reducing time consumption thus saving cost.
The future of blockchain in logistics - Conclusion
Blockchain has been known for its feature of cryptocurrency, such as Bitcoin and Ethereum. It deserves the credit for the popularity and success of cryptocurrency due to its assistance towards decentralized operations, better security and immutable ledgers. In the future, blockchain will aid logistics companies in the following ways:
Enhanced security through encryption to protect consumer data.
Decentralized ledger that allows for network-wide updates without third-party interference.
Real-time updates to documents can improve workflow efficiency and reduce costs.
Blockchain-based tracking and monitoring systems enable immediate error tracing and correction.
Smart contracts streamline processes by eliminating the need for audits and providing binary consent.
Implementing loyalty programs with secure data collection can establish consumer trust and expand the network of customers and suppliers.
All these benefits make it an exciting technology to add to the logistics and supply chain industry.