The Impact of Blockchain on the Logistics Industry
In a globalized world, the logistics industry is growing by leaps and bounds. In fact, its market size is expected to reach $12 billion by 2027.
However, the less friendly face of the industry is losses due to unnecessary intermediary costs, cyber-attacks, or mislabeled cargo. These problems translate into about $50 billion in lost profits per year. This is where blockchain technology can completely change logistics operations, and we tell you the keys to achieving this.
What is Blockchain in Logistics?
The blockchain in logistics comes in the form of a decentralized public system of record that documents all changes in a real-time record.
With this data, companies can create a strategy to implement faster routes, eliminate unnecessary steps in the delivery process, reduce errors and save time.
The use of this technology offers a clear impact on the profitability of companies in this sector, in addition to solving trust issues, speeding up processes, reducing risks, and increasing transparency.
Benefits of Blockchain in Logistics
Blockchain technology is revolutionizing the current business landscape. Beyond cryptocurrencies, their applications in any sector are innumerable, and logistics is no exception. Some of the most important benefits are:
- Transparency and traceability: with blockchain technology, falsification of documentation is drastically decreased, allowing each part of the supply chain to follow the status of transportation in real-time and reliably.
- Provenance validation and quality assurance: during transportation, product damage or spoilage is quite common, but with blockchain, the origin of items can be traced back to a specific producer. In addition, compliance with standards is ensured, or non-compliance with standards is detected.
- Improved efficiency: to avoid administrative errors, excessive time consumption, or fraud during document exchange and payments, smart contracts can be introduced that circumvent these problems and improve workflow.
- Speeds up payment processes: blockchain technology keeps a detailed record of communication records between those involved and allows any action to be traced. This is reflected in increased security and a low risk of fraud or error in money transfers.
Use Cases of Blockchain in Logistics
Blockchain technology applied to the logistics and supply chain sector has numerous applications. We have compiled some of the most important use cases and examples.
The supply chain involves numerous stakeholders during the process; therefore, blockchain technology is very useful for building an efficient system that allows you to track your products at any level.
We find examples in companies such as Walmart, Nestlé, or Unilever, which have already introduced this technology in their businesses to track food from the farm itself.
Freight companies have already seen the benefits of blockchain, especially in international delivery, in tracking each item while simplifying the current logistics process. One example is the giant Maersk, which uses it to control its cargo movement across international borders.
This new system is expected to save billions of dollars for companies involved in transporting these cargoes, which will help reduce errors and improve delivery times and fraud detection.
Secure billing and payments
The blockchain simplifies payments across international borders while ensuring their security and transparency. Companies such as Visa have launched their own B2B Connect payment service, based on this technology and smart contracts, which helps manage billing and payments.
Blockchain technology also has advantages for end consumers and not only for companies. Buyers can verify the authenticity of the origins of products in a secure way; for example, in luxury items such as diamonds.
It creates greater trust and credibility and avoids counterfeits or illegal trafficking.
One of the big problems in the industry is disputes over missing or late cargo. Typically, independent auditors would be hired to sort it out.
FedEx has launched an initiative to solve this that revolves around a blockchain-based ledger that collects information from shipping and receiving parties. This eliminates the need for a third party and decreases fraud attempts.
Adoption of Blockchain Technology in the Supply Chain and Logistics
The logistics and supply chain industry has to ask itself the question of whether it is worth introducing blockchain technology into the sector. We have mentioned above all the advantages it brings and the problems it can address, but it requires a specialized partner to facilitate the process and adapt to each company.
Beyond process efficiency and cost reduction, blockchain technology also enables the exploration of new services and solutions that may not yet have been explored.
At Plain Concepts, we have experience developing blockchain solutions across all industries. The more companies that join this challenge, the more successful the logistics sector will be in the coming years. Do you want to be part of it? We can help you!