Blockchain in Logistics: What Does the Future Hold?
Blockchain adoption has often been associated with fintech more than any other industry. However, there has been an increased interest with industries in different sectors seeking to incorporate the technology blockchain in their operations. From manufacturing, real estate, legal to marketing and entertainment, companies like Noiz Chain, Epic Mega and LiveTradr are looking for ways to incorporate blockchain in their dealings.
Blockchain has paved way for other industries to grow. Beyond fintech, an industry that has demonstrated potential in blockchain adoption is logistics according to John Hoelzer, founder and CEO of ONe Network.
He says, “Fintech has been the Soup of the Day for quite some time, as it should have been. But now Blockchain is becoming more and more mature and understood. This allows for different markets to find new ways of using Distributed Ledger Tech to better their own industries. Logistics will be one of the many different industries who will use and benefit from immutable ledger.”
Logistics entails managing the flow of things, both tangible or intangible, from the point of origin to consumption with a view of meeting the needs of customers or companies. As such, incorporation of blockchain technology in the logistics sector is aimed at improving efficiency by automating tasks, eliminating intermediaries and adopting new processes that secure transactions.
Logistics companies that integrate blockchain have to comprehend how the technology leads to new advancements, possible hurdles and solutions. Further, such companies have to understand the advantages of adopting the technology acquired with its adoption.
Blockchain can be applied in various areas within the logistics sector. For instance, manufacturers and retailers can use the technology to provide information to consumers on how each product is sourced. Walmart, one of the largest retailers in the US, for example, will now require vegetable suppliers to track contamination starting next year.
Blockchain technology can also assist with management of tasks in automated transport such as compliance, route planning, delivery scheduling, management of fleets and connecting business partners to improve efficiency.
This technology can also be used to increase transparency in supply chain management and tracing the origin of goods by storing data on how they are produced. Other areas in logistics that blockchain has considerable potential to enhance is production of accurate invoices in freight and resolution of disputes. The technology can also be useful in sharing information with stakeholders and improving their tracking methods.
Hindrances to Growth
But blockchain application in logistics in local and global trade is not without hindrances. Due to involvement of different parties whose interests and systems differ, the process is intricate. This means attaining innovative efficiencies in this area will probably influence the economy on a global scale.
The process will be complicated by legal procedures, guidelines and laws in some business aspects while others will be required to move from old systems and incorporate new methods. Interoperability and compatibility is the other challenge. Organizations will have to establish standards and agree on how systems will interoperate between blockchains.
According to Navjit Dhaliwal, CEO of Iagon, blockchain will eventually be adopted in logistics and and achieve growth once these challenges are addressed.
He says, “There is absolutely no doubt that blockchain will break into the logistics sector and make an immediate and enormous impact. Although it is widely thought of as an additive to the FinTech sector, the widespread growth of international trade and logistics is continuing to thrive, being hampered only by their current infrastructure and periodic fraud. The implementation of the Blockchain within these industries will act to stave off and overcome those obstacles to growth and quickly become the new normal across the board.”
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.