How Blockchain Technology Can Change The Logistics Industry

Modern technologies enable worldwide trading, making the freight business grow exponentially. Its annual revenue is running into many millions. Yet, the old issues are still here. Obsolete equipment, supply delays, imperfect systems, and tonnes of human errors can destroy the booming sector. Some specialists claim blockchain to be the answer. We decided to find out if it really can save the logistics industry.

Reasons Why Logistics Companies Should Adopt Blockchain Technology

In plain English, Blockchain is a database that records everything that occurs. These records cannot be deleted or changed. It gives the logistics business a chance to perform all types of transactions in a more secure and transparent way. When an item is shipped, it changes dozens of hands along with its documentation. The software system based on Blockchain technology allows you to keep all the papers safe. 

This is likely why several SaaS companies working in the freight sphere are opting for Blockchain technology. Blockchain also brings a lot of advantages to the owners of logistics or transportation companies. Here are the most evident ones:

Transparency: The most significant advantage for you from a Blockchain system is that all the documentation will be perfect. Every consignment note, list, and waybill will be filed correctly and promptly without getting lost. Such transparency is vital for all participants. As a customer, you can see the whole process, from goods ordered from the manufacturer to those delivered and placed on your shelves. It allows you to make a well-considered decision about the best price-quality ratio and decide the supplier you should partner with accordingly. As an auditor, you can see how the goods are distributed and how they can be improved. 

Security: A shared, indelible ledger with codified rules can ensure the necessary audit with the help of internal systems and processes. Origin, place of storage, authenticity, property certificates, records: all the required information is in a single ledger! The most crucial part is that all document changes are recorded and stored, and can’t be deleted or changed. It guarantees no document will be lost, destroyed, or mixed up. 

Scalability: One of the best parts of leveraging Blockchain technology is that anyone from anywhere in the world can access the document from any device at any time. 

Improved Management: The blockchain system is very structured; it gives you insights to improve your transportation or inventory system. With the right settings and program customization, it can give you recommendations that will save time and minimize expenses. Due to a smart contract, which uses blockchain as a base, you can also automate the document filing process. This system works autonomously, which means it can execute the terms of a contract without your interaction. 

Cost Saving: Validating all the transactions between a supplier and a customer usually takes a long time. An automatic flow of documents dramatically reduces this time. Thus, you process more goods and earn more money. With a unified document management system, you are sure that fragile goods with specific storage and transportation conditions will not be harmed during the delivery.

All these small benefits bring in bigger advantages in the long run. In the future, you get:

• No paperwork delays: A lot of them will be filed automatically. 
• No identification issues: There have been many instances of fraudsters using fake IDs and documents to steal goods. The Blockchain system ensures this doesn’t happen.   
• No trust issues: Your customers can track the delivery process and see all the details anytime. You will also be able to track your orders and choose the most reliable supplier or transportation company.

Blockchain Solutions for the Logistics Industry

If we have successfully persuaded you to believe that a blockchain-based software system can boost your logistics or transportation business, then go ahead and take the next step to figure out which system exactly you need for your business. The only two options are creating a system from scratch or using an existing, ready-made solution. However, both variants have a bright and a dark side. Let’s compare the two:

A custom solution developed specifically for your needs will cost you more than a turnkey solution. Yet, you should remember that when you use proprietary software solutions, you must pay monthly. This means a system from scratch would cost you less in the long run. 

The turnkey solutions are ready to work within a few minutes after you’ve purchased them. On the other hand, a custom solution requires more time for planning, development, and testing. Nevertheless, even if you paid for an existing platform, you must hire an experienced development team to customize and set up the system. 

When you start your development, you get a system that fits all your needs. When you buy a system, you get the whole package of services, and there is a high chance you end up paying for the features that are not required. But this is not the worst scenario; it feels even worse when you’ve paid for the system but didn’t find the necessary functionality. In such an instance, you will need to contact the SaaS provider to find out if they allow external developers to customize the system and whether they provide any tools (like an SDK or API). If they don’t, you’ll have to look for another provider. Fortunately, most software providers nowadays offer a free trial period, allowing you to test a system before you pay.

If you believe that turnkey solutions have more assets than faults, let’s take a look at the most famous and efficient software solutions for the logistics sphere based on Blockchain technology. 

IBM is probably the most well-known Blockchain solution for Freight and Logistics. The tech giant offers:

• Access according to a user's permission level
• Comprehensive data on a container, its location, and stage of processing.
• Real-time data about goods 
• Data protection, no one can change, modify, or delete the documentation.
• Fraud protection is ensured due to the transparency of the system and detailed records. 

Apart from the ones mentioned above, the company also offers developers various tools to create applications based on blockchain. This means it’s a great software for developing a custom solution, specifically if your company is hiring a professional vendor.  

OpenPort platforms is an Asian company that created a Blockchain system on Ethereum to manage one of the most challenging supply chain and freight tasks – the cash flow issue. The main idea here is to eliminate all paper proof of delivery documents, slowing down the process. OpenPort provides a single electronic platform, secured with a blockchain structure for all participants: shippers, retailers, and transporters. The system offers: 

• A complete set of products based on Blockchain technology, like a mobile app, analytics, and multi-modal TMS.
• Easy integration with the ERP system of a shipper. 
• Fast and secure payments are protected from fraud, cyber attacks, and system failures.
• Smart contracts, which track every transaction and save it in a blockchain
• Easy access for all participants 
• Third-party data integration (GPS, IoT)

OpenPort recently joined the Blockchain in Transport Alliance (BiTA). BiTA is a non-commercial organization that creates standards for Blockchain use in the logistics and transportation sphere. 

BlockArray offers logistics enterprise solutions. The company provides a solution and guarantees on-chain privacy. The software hides transactions from all non-transacting participants using symmetric and asymmetric encryption, along with blinded addressing. In such a mode, you get complete confidentiality and all the benefits of a blockchain system. Another advantage of this solution is the company's distributed hosting scheme. The combo of collocated servers and usual cloud hosting providers makes it possible to guarantee an uptime of 99% and a compatible pricing model. 

How to Embrace Blockchain Technology for Logistics

If you recognize the potential of Blockchain technology for logistics business and seriously want to adopt it, you have to consider a few things before you develop the application roadmap. There are six basic steps that will guide your business through Blockchain adoption.

1. Define the strategy
Brainstorm and discover how blockchain can support your business and help you reach your objectives.

2. Outline the plan
Be specific. Choose certain units of your business where the value of blockchain is most evident. Then develop the detailed plan that suits your business needs.

3. Prove the concept
Focusing on the outlined use case allows you to learn the technology values controlled. Make as many iterations as necessary and make necessary corrections before proceeding to the next step. 

4. Develop and launch
After the assessment stage, you are ready to implement the project and launch the transition from your standard business model to a Blockchain-based one.

5. Scale
After a successful test, it’s time to implement Blockchain solutions for the following business units defined in the initial strategy.

6. Expand and manage
Finally, you can expand the platform and deploy ongoing improvements to it.

Last Words:

In summary, blockchain is the future of all Logistics. The technology will solve all the existing issues that slow growth. Hire a firm from the list of top blockchain technology companies to build a customized solution for your logistics business.