Blockchain use cases in logistics

The word “visibility” is commonly used in the supply chain world, and a lot of software companies are already addressing it. But it’s also one of the most targeted needs in blockchain logistics applications, along with traceability.

The supply chain is ripe for blockchain. An average shipment can move between 30 different organizations, with more than 200 communications during its route. Given a supply chain’s complexity and that many of the involved companies don’t have compatible software, delays along the chain are common, and it may be difficult to know the holdup’s location.

A globally significant industry

Our way of life depends on the transfer of products, service, and value. Elizabeth Drew, a writer from Masterra with years of experience in logistics, underlines the role of this sector in the global economy:

“The logistics industry gives jobs to more people than any other industry. It grows constantly, and we need to implement innovative solutions to cope with the growth of the shipping needs.”

John Monarch, CEO at Shipchain, agrees with the previous thought, noting that the logistics sector employs the most people in the world. He explains that as this sector expanded over millennia, it has required innovation to scale and sustain practicality for the growing human population. This is happening again at the time of writing, with the fourth industrial revolution. Monarch explains:

“Connected devices revolving around the Internet of Everything (IoE) need a higher level of security. Blockchain technology is a matchless solution in this regard because it provides the best protection through distributed ledgers, advanced encryption, smart-contracts and reduced intermediaries. As a result, this will tackle corruption, ransomware, theft, premium-fees and tracking issues.”

Blockchain will enable accountability

Given that shipping anything is a sequence of custody handovers, having an immutable record of chain of custody transaction makes it impossible to lose track of who is responsible for a piece of property during each handover. Existing courier services often track packages along their route, but such methods are imperfect. The COO of BitLand, Christopher Bates, says:

"The issue therein is that since they are mutable, shipment records can be hidden or erased completely to the detriment of the people at large. Governments are able to hide their black budget spending by erasing shipping records or preventing records from being issued at all. On the one hand, governments will argue this is for national security, but on the other hand, the taxpayers that are sponsoring these budgets deserve transparency in spending."

Blockchain technology combines chain of custody control with the transparency of immutable record-keeping. This creates an ecosystem that deters malicious actors, as they will eventually become known due to system transparency.

Examples of use cases in logistics industry

Like the already widely known IBM/Maersk collaboration, ShipChain wants end-to-end visibility, theirs on one platform and including all shipping modalities. ShipChain’s Track and Trace product executes smart contracts between shippers and carriers. They work on the Ethereum blockchain, using individually encrypted geographic waypoints, so that only the parties involved in that shipment have visibility. ShipChain’s goals are to enhance transaction time, reduce fraud and theft, and eliminate freight broker fees, thus reducing cost.

Modum, a Swiss company, provides data integrity for pharmaceutical companies. It is platform agnostic and uses smart contracts and external sensors to track environmental conditions for pharmaceutical products while in transit, and to verify the data when executing the smart contracts. While the sensors could eventually be used in other industries, Modum is focusing on pharmaceuticals, to help with regulatory compliance in the European Union, which requires proof that the products were maintained in certain conditions during transport.

Using the Ethereum platform and smart contracts, Hong Kong-based 300Cubits aims to reduce cargo rollovers and no shows. Shippers and carriers agree to a TEU token deposit, forfeited if either side doesn’t meet their end of the contract. Last year the start-up was still developing its contracting software and selling and distributing tokens. The booking deposit system had a few live pilot tests this spring, and the booking system went live in June.