The role of blockchain technology in the logistic industry

blockchain in logistics

Blockchain is one of the most progressive technological trends in recent years. The reason for this popularity is the development of cryptocurrencies.

But it would be wrong to limit the area of ​​cryptocurrencies. Blockchain technology is suitable for various industries where it is important to boost data management and enhance digital data security.

One such industry is logistics: the blockchain is included in TOP Logistics Technologies in 2021.

Its use simplifies the process of managing complex supply chains around the globe and helps all participants to monitor all processes.

Blockchain technology: what’s the point and how it works

Blockchain is a continuous chain of blocks that contains a register of data. In other words, it is a decentralized and secure database in which transactions are recorded sequentially and cannot be changed unnoticed.

Blockchain technology is generally associated with cryptocurrency, as it has emerged as a technology to launch bitcoin. The conception of the first blockchain was developed by a man (or group of people) known as Satoshi Nakamoto in 2008. And the idea was realized the following year when the main component of the cryptocurrency Bitcoin was developed.

In the beginning, blockchain has been used to ensure the privacy of transaction participants in the cryptocurrency market. But later the technology became popular in other fields and industries.

The uniqueness of blockchain is that the preservation of data in a decentralized system allows not only to save data but also to quickly validate data. The use of blockchain technology excludes unauthorized data entry, as all network members verify changes in the registry.

The contents of a blockchain file are always protected and even a person can access it, to see and use data a person needs to have the keys.

For effective communication and data exchange in the network, all participants of the blockchain agree on a consensus algorithm. That means all decisions between participants are made on the principles of equality and fairness.

This type of cooperation makes blockchain an indispensable technology for various businesses, where the protection of information is crucial.

The advantages of using blockchain in logistics

The logistics industry has many challenges: complex supply chains, paperwork, which is still often done manually, the risk of human mistakes, the cooperation of all intermediaries, and cyber attacks.

Along with this, logistics has great potential: in 2017 it was estimated at 8.1 trillion dollars, and by 2023, according to Transparency Market Research, it will increase almost 2 times.

Understanding how promising the industry is, business owners should pay attention to the blockchain and implement it to optimize data management.

Of course, complications add bureaucratic hurdles. For example, various countries, companies, and government agencies are involved in international transfers.

Each participant in the logistics process has its own rules of maintaining and accounting documentation. If refrigerated goods are transported from East Africa to the EU, about 30 participants must take part to obtain a transport permit and stamp.

The cost of processing documents in this process can vary from 15% to 50% of the cost of the physical transport.

According to logistics experts, this blockchain technology can not only eliminate bureaucratic moments in world trade but also create a transparent and secure system for storing, tracking, and exchanging data between all participants in the world market.

Speaking of numbers, according to DHL, the use of blockchain in logistics can increase international trade by 15% and increase world GDP by 5%.

Let’s see what logistics processes have already been optimized by blockchain.

1.   Monitoring of cargo and accounting data

Bad experience: the maintenance of stacks of paper and the use of local accounting systems of supply chain participants (CRM, BPM, ERP, etc.) often leads to disagreement in data and increases the risk of loss of transport and cargo.

Technological solution: Generate a single digital document management system where data is stored in the cloud and all stakeholders have access to it, to track the geolocation of goods in real-time.

Examples of companies: Carrefour, Unilever, Nestle.

2. Identification and quality control

Bad experience: due to inappropriate delivery conditions there is a high probability of spoilage of food and medical devices.

About 8.5% of pharmaceutical parcels are exposed to inadequate temperatures, so they spoil quickly and cannot pass the customs control.

Technological solution: Every cargo has marking with an RFID tag for automatic identification. This will allow all participants in the supply chain to better interact, track location, and measure important indicators – temperature, humidity, etc.

Examples of companies: Everledger, MediLedger, SkyCell, Organic, Co-op.

Read also:  7 Major Functions of Logistics

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.