Blockchain Technology: The Future of the Freight Industry?
Blockchain, a technology that is rapidly being applied in many industries, has the potential to disrupt traditional workflows in transportation. According to Forbes, only 0.5 percent of the world’s population is using blockchain technology today compared to the 50 percent, or 3.77 billion people, who use the internet. As the trucking industry continues to evolve, the need for transparency and traceability will become an even greater priority for shippers, brokers and carriers. Blockchain technology may well be the solution.
As defined by The Economist, a blockchain is a shared, distributed ledger that records transactions and allows the tracking of assets in a business network. Cryptography in the blockchains allows shippers, brokers and carriers to maintain a continuous list of records and transactions that is both permanent and secure.
According to CCJ, blockchain is the next digital frontier in the freight industry. Part of the rationale is its ability to help brokers, vendors and customers create transparency, speed up the time it takes to complete transactions and fulfill orders, secure data transfers and eliminate intermediaries.
For freight brokers, blockchain technology offers solutions to industry challenges such as food contamination. Because blockchains are digitized like a map, distributors can track contamination to the individual shipment, preventing large-scale recalls and minimizing financial losses. And, in this post-9/11 world, this capability brings a level of traceability to efforts to prevent and investigate terrorism.
Blockchain technology in the freight industry benefits customers by making their purchases transparent. Customers can see each step of the journey their goods took from pickup to delivery. It benefits freight audit vendors as well. Having access to a complete view of every step in a transaction makes the auditing process more efficient and accurate.
Inbound Logistics suggests that the transportation industry could benefit from leveraging blockchains to track information like the movement of intermodal containers. The resultant information could then be combined with third-party situational data like traffic and weather information to help identify the root cause for late or behind-schedule deliveries.
According to Inbound Logistics, the benefits of the blockchain technology are that it:
- • Builds trust with customers by giving them complete visibility
- • Reduces costs by tracking individual shipments
- • Accelerates transactions by giving auditors transparency
- • Removes the middleman from business processes
- • Allows contracts to be verified, signed and encoded digitally
At CX North America, our research and development teams are currently investigating and testing the use of blockchain-based technologies to help further improve security and scalability for the thousands of freight transportation providers we serve worldwide. Our goal, as always, is to deliver the advanced functionality our customers require in order to be competitive with the “big guys” and grow their businesses.