Can Blockchain Tech Solve The Problems That Mire The Shipping & Logistics Industry?

The logistics and freight movement industry have just as much to gain from the implementation of blockchain technology as any space, probably more than most. It is mired by antiquated infrastructure and theft.

In the United States alone, fictitious pickups account for approximately $150 million in losses each year. Theft is estimated to cost the industry as much as $30 billion a year worldwide, which constitutes to about 20 percent of end of line costs.

Blockchain as a Solution…or Maybe Not

We who believe in the future of blockchain technology cheer every time we see one of the big boys come on board.

When we read of some new venture or proposed protocol involving an IBM or Maersk, we are pleased. We feel one step closer.

It stands to reason that the involvement of such companies will ultimately help adoption.

For the Transportation of Goods sector, the blockchain has the potential to create an immutable distributed ledger to take the place of the trail of paperwork. The goal is to offer streamlining and fluidity to all the processes.

Vehicle maintenance will also be improved, as the vehicle’s history will stay with it through the blockchain.

The rapidly growing number of blockchain platforms embarked upon in the logistics industry has some people concerned, however.

The fear is that, with so many concerns trying to do the same things, nothing will ever get done because there will be no central authority.

In his article, “Blockchain success in shipping hinges on standardization,” for JOC.com, Peter Terschwell says that the “barrage” of blockchain announcements concerning the shipping industry “raises more questions than it answers.”^[1]

The central question Terschwell asks is if the industry could see the rise of its decentralized antithesis, owned and controlled blockchains, which charge fees to use.

Mr. Terschwell asks valuable questions, as others have and will continue to do, keeping the discussion vibrant.

Still, concerning the fear of too many blockchain players in any industry, we must believe they will learn to work together.

Mutual benefit has led fierce competitors to work together in many industries. That is human nature, and it won’t change because the blockchain is different than all other technologies.

Following are some of the notable consortia and companies seeking to apply blockchain tech to the shipping and logistics space.

BiTA (Blockchain in Trucking Alliance)

BiTA is a consortium of companies working together to develop blockchain standards and education within the freight industry.

The BiTA website states its goal is “to bring together leading companies in the freight technology industries that have a vested interest in the development of blockchain.”^[2]

Aside from the 60 or so current members, the Alliance reports that thousands of companies have applied for membership, and about 300 are currently being considered.

The BiTA belief is that, without a shared set of standards across the industry, the barriers that cause the problems of transparency and trust are going to continue to exist.

Notable Members of the Alliance

• FedEx: FedEx is a founding member of the alliance. The company is currently in the process of testing some blockchain platforms for use cases for the Alliance. One launched pilot program is for the storage of data for dispute resolution.
• UPS: With its addition, UPS gives the Alliance the world’s largest package delivery company.
• SAP SE: SAP joined BiTA the same day it joined Spain’s Alastria Consortium. The Consortium offers a common digital space for its members to develop services and blockchain products.
  These simultaneous moves, coupled with Leonardo, creates the belief that the company is going to be a major player in the space. Leonardo, the company’s digital innovation system, is built on the Ethereum blockchain.With Leonardo, the company seeks to help customers navigate the ever-expanding data world, blockchain included.

List of other BiTA members

IBM/Maersk Partnership

Righting the flow of information sharing and border administration in the world of international trade “could increase GDP by nearly 5% and trade by 15%.”^[3]

This increase would be in the trillions of dollars. Fortune.com shares these stats from a 2013 study by the World Economic Forum.

If IBM and Danish shipping giant Maersk succeed, the blockchain will overhaul these concerns in the Logistics Industry.

Announced on January 18, the yet unnamed company will seek to digitize the world’s shipping industry. The two companies began testing the use of blockchain in 2016.

They tracked a container from Mombasa, Kenya to Rotterdam in the Netherlands. That test and other successful follow-ups convinced the parties of the system’s potential.

The IBM/Maersk technology is built on Hyperledger Fabric 1.0, an IBM-developed blockchain that is now overseen by the Linux Foundation’s Hyperledger Group.

The new company’s CEO, Michael J. White, says that he expects the venture to receive regulatory approval in the spring and then begin selling software subscriptions by the third quarter of this year.

Walmart

Walmart is leading a group of the food sector’s major players in another partnership that involves IBM and is being built on Hyperledger. This one searches for a food safety solution.

Excited by results of early testing of the blockchain application, Walmart is quickly reaching out to suppliers and retailers regarding consideration of the consortium. Other notable joiners are Dole, Nestlé, Kroger, and Tyson Foods.

The goal is to apply blockchain technology to help secure digital records and improve traceability of foodstuffs. The blockchain would create its immutable and transparent ledger across its complex network.

One major potential benefits could come in the in food-borne illnesses. Presently, an investigation into such a situation can take weeks. That can be reduced to seconds with a blockchain-based system.

Ten percent of people fall ill from food-borne illnesses, and 420,00 people die from contaminated food each year. The consortium seeks to decrease those totals.

Blockshipping/MakerDAO

Blockshipping’s Global Shared Container Platform (GSCP) seeks to register the world’s 27 million shipping containers on the blockchain.

The company has announced a partnership with MakerDAO. The company will leverage MakerDAO’s Dai stable coin to power the GSCP platform and its CPT (Container Platform Token).

Blockshipping’s current goal is to have 60 percent of the world’s containers covered within three to four years.

Conclusion

Blockchain adoption overall is perhaps underscored most by the involvement by companies with household names. Companies proven in other business sectors give the blockchain a degree of credibility that tech startups can’t.

Yes, in the logistics space, as in all sectors, there are various companies attempting to do similar things with the blockchain.

We have faith in the technology and must also have faith that these players will work together for its benefit when such necessity arrives.

We’ve gotten to similar obstacles with many technologies, and we’ve made it over them.

In 20 years these mentioned will likely be among those who have led to the application of blockchain tech to the shipping and logistics industry. Then, these potential benefits will have been realized.

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