Blockchain is more than just a buzzword in the finance industry. In fact, it may soon provide benefits that have a major impact on the logistics industry.
Continue reading to learn more about how blockchain and cryptocurrency can help the logistics & supply field.
Blockchain is digital record-keeping technology. It supports Bitcoin and other kinds of cryptocurrency.
In the financial world, it’s been a game-changer. However, there’s another field where blockchain holds promise—the shipping industry.
Blockchain just may improve the supply chain. It will enable companies to transport goods faster and more cost-effectively.
Furthermore, it will make products more traceable and industry coordination more efficient. The tech could even make financial transactions in the shipping industry more seamless and accessible. With it, companies could track and record every transaction.
Blockchain is a decentralized ledger. In other words, it’s a distributed digital system used to record transactions between parties.
Moreover, blockchain is verifiable and tamperproof. You can even program a blockchain ledger. In doing so, programmers can make it trigger transactions automatically.
Blockchain technology will help firms protect their shipping operations against bad actors. Simultaneously, it will support improved performance across the board.
Of course, the shipping industry is waiting for a field-specific solution. This kind of innovation will require new permissions and rules. Fortunately, these changes are already in the works.
Already, the largest retailers and manufacturers are taking advantage of advanced shipping technology. As a matter of fact, a lot has happened in the field since the 90s.
For instance, enterprise resource planning software (ERP) has transformed the industry. Still, transparency is a challenge for large supply chains that execute complex transactions.
Imagine a transaction involving a retailer, supplier, and bank. The bank would provide the capital needed to fill an order. This kind of transaction would involve a flow of financial, inventory, and information data.
As things stand, none of these flows necessarily create financial ledger entries for all three parties. These transactions can grow large and complex. When they do, it gets hard to minimize errors, improve decision-making, and resolve conflicts.
Here’s where blockchain can make a massive difference.
Today’s ERP systems don’t provide sufficient access to all the stakeholders in our transaction. At no point do all three parties involved have access to all inventory, information, and financial data. A blockchain system, however, can eliminate these kinds of blind spots.
Conventional record-keeping doesn’t have the capability to trigger entries in financial ledgers. Furthermore, it could allow two parties to interact without the awareness of a third party involved in a transaction.
Blockchain ends these problems. Every step of a workflow gets recorded by blockchain. As a result, information about every interaction between all parties is always available to everyone.
Today, shipping professionals must deal with several challenges. These hurdles include human errors in inventory data, missing shipments, and duplicate payments. These kinds of execution inaccuracies are often impossible to catch in real-time.
Most often, firms find mistakes after they happen. Even then, it’s costly and difficult for them to find the source of the problem and fix it.
Remedying this kind of issue requires tracing the sequence of events that are recorded. Firms must find this information in whatever ledger entries and documents are available.
Modern ERP systems capture all kinds of information. Still, it’s tough to figure out what information corresponds to transactions.
In part, shipping companies deal with this kind of problem with audits. Audits are a necessity for ensuring contract compliance.
However, they provide limited information that can help to improve decision-making. Audits also do little to help companies address operational inefficiencies.
Let’s try another blockchain example.
Think about a retail food company that must manage goods that have reached the end of their shelf life. An audit can show a store how much of its inventory has expired. However, the audit won’t necessarily tell the company why they expired.
Now, suppose that a retail company decides to track its perishable inventory with blockchain. It can help to reduce cases of expired food items in the first place.
With blockchain, retailers can perform detailed analyses. It will help improve shelf rotation compliance.
It will also help the retailer better follow consumer demand. What’s more, the company can manage upstream inventory more efficiently with blockchain.
With all the potential of blockchain, you’d think that every company would embrace the technology. Indeed, many companies are ready for blockchain—in theory.
In reality, however, only a relatively small percentage of companies have tangible plans to adopt the technology. Furthermore, only a small fraction of companies today have actually invested in and deployed this tech. This gives you a great opportunity to get ahead of your competition.
With Blockchain, you can always know the true value of your products. It can help you to overcome the current challenges of transparency that exist in shipping. Blockchain will also make it easier for you to investigate your supply chain when needed.
Let’s look closer at the benefits of blockchain in the shipping industry.
For years, transparency has been an issue in the shipping industry. Blockchain can change this unfortunate circumstance.
It can provide access to all stakeholders. It will also make it possible to track deviations and variations in the supply chain.
Blockchain also makes it easier to verify the ownership of various assets. This benefit is quite possibly the most important feature that it can provide.
Firms spend a considerable amount of money on administrative and processing expenses. Think about what it takes to receive payment for an invoice.
On average, a company might wait 42 days to receive payment. Meanwhile, billions of dollars stay locked up in shipping-related disputes.
Blockchain can solve these kinds of problems. With it, secure payments can clear directly and automatically. In turn, blockchain can help to increase profitability in the industry.
Blockchain can help shipping companies improve fraud detection. With it, you can scale your systems as needed—without worrying about security holes.
There’s only one way to falsify a blockchain transaction. A malicious actor must roll back all previous transactions before the one they want to change.
In practice, this kind of fraud would prove too expensive, even for the wealthiest individual. In this way, blockchain is virtually impenetrable.
Initially, blockchain served as a financial solution. It works so well that it quickly outgrew the sector. Now, companies across all industries want to know how they can embrace the potential of blockchain.
Blockchain transactions follow specific contract-bound terms. Once programmed, blockchain can perform transactions instantly. At the same time, it can facilitate a safer and more efficient delivery of goods.
In the shipping industry, there have always been gray areas. With this in mind, many shipping companies work with a limited fleet, leading to struggles with resource allocation. As a result, drivers might deliver unfiled truckloads covering distances more than 250 billion miles every year.
A carefully implemented blockchain solution can decrease these unfiled shipments drastically. It would help firms better manage assets, whether they’re on the other side of the country or spread around the world.
Blockchain can also make it easier for customers to track products. The current methods used for tracking shipments are outdated.
Moreover, they’re not always reliable. Also, current tracking methods don’t enable parties to verify product authenticity.
Several food companies are already testing blockchain with much success. It’s helping the companies to trace products to their origin. It also helps them match rate quotes to invoices and find inconsistencies.
In any country, the shipping industry drives the economy. Yet, the economic structure and industries shift continually.
At the same time, there hasn’t been much change in the shipping industry. It’s falling behind other fields.
Nevertheless, demand in the shipping industry is at an all-time high. Consumer expectations and exhaustive regulations are taking a toll on the industry. Blockchain tech can reverse these circumstances.
In the shipping industry, transportation is a major percentage of total expenses. On average, shipping operations might spend about 30% of their budget on transport. With spikes in fuel prices, this expense can reach as high as 50% of total costs.
Of course, there are ways to solve these kinds of problems. However, they involve affecting other aspects of an operation.
For instance, a company could reduce carriers. However, they’d then risk becoming overly independent on their remaining vendors.
Alternatively, the company could consolidate shipments. In this instance, however, this might increase the occurrence of delayed deliveries.
Blockchain provides more stability and flexibility. It can provide companies with the information needed to successfully take strategic risks. More importantly, it can help shipping companies plan more efficiently and reduce losses.
Financing is a major component of the supply chain. For instance, companies must finance freight order payments, open accounts, and letters of credit.
It’s important to make sure that all these elements receive cash flow. However, this task can prove challenging. With Blockchain, however, you can execute these kinds of financial flows seamlessly.
Companies must face political uncertainty and low manufacturing performance. They must also compete with inflation, a rising consumer price index, and other issues.
This tech can reduce supply chain barriers affecting available services and products as well as the need for logistics. It can provide companies with the improved cash flow they need to navigate uncertain times.
Some even believe that blockchain can help with a lack of skilled drivers in the shipping industry. The government is imposing many regulations on the shipping industry. This makes it vital to choose drivers selectively.
Any discrepancies regarding drivers can impact the shipping company negatively. It’s highly difficult to inspect every driver and make sure that they always follow the rules.
In some cases, companies can’t track drivers. As a result, there’s a lack of real-time accountability in shipping when it comes to drivers. With the automatic checks and balances of blockchain, however, shipping companies can overcome this kind of blind spot.
Again, government regulation is extensive in the shipping industry. It’s the government that makes the rules.
Any products that pass through shipping channels must undergo safety and quality checks. They remain out of circulation before passing these checks and reaching their destination.
Shipping companies must deal with a massive amount of procedures. Blockchain, however, can make it easier to conform to these processes.
It can drastically reduce the time it takes to perform safety and quality checks. What’s more, it can perform these checks with much more accuracy.
Blockchain can provide tremendous benefits for the shipping industry. Its features can help to greatly increase the overall output of the industry.
Again, the tech can bolster the integrity of supply chain information and make it available to all stakeholders. Also, it can enable the tracking of shipments from their origin all the way to consumers.
For example, retailers can take advantage of this feature to make sure that their shipments get delivered on time. Most importantly, however, the decentralized structure of blockchain can remove discrepancies from the shipping ecosystem forever.
Hopefully, it’s become clearer how blockchain can benefit your shipping operation. If so, you may want to learn more about how blockchain can improve your shipping strategy. Onsite Global Logistics can help.
Onsite Global Logistics is an experienced international logistics & supply chain company. We have available agents in 164 countries around the world. No matter your industry, we can provide you with an innovative range of freight and global logistics solutions.
Please for free to contact us today to learn more about deploying blockchain technology for your shipping operation.
Onsite Global Logistics is a third party logistics provider 3PL helping companies with innovative global logistics and supply chain solutions
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