For the past few years, Blockchain technology has turned into an emerging solution for the transportation and logistics industry that has addressed some major inefficiencies that the industry suffered for long. Logistics is regarded as one of the domains where blockchains are good fits for a series of reasons. This includes part of the supply chain too. During the product’s lifecycle, as it flows down the value chain that means from production to consumption, it generates data in every step that needs to be documented as a transaction and creates a permanent history of the product. If implemented, blockchain technology can effectively contribute:

• To record every single asset from product to containers as it flows through the
• supply chain nodes 
• Can track orders, receipts, invoices, payments, and any other official document,
• To track digital assets such as warranties, certifications, copyrights, licenses, serial numbers, bar codes in a unified way and in parallel with physical assets, and others. 

Moreover, with its decentralized nature, the Blockchain can contribute effectively to share information on various aspects like production process, delivery, maintenance, and wear-off of products between suppliers and vendors. This brings new modalities of collaboration in complex assembly lines. 

There are various challenges in logistics parameters, such as –

• delays in delivery 
• loss of documentation
• unknown source of products, errors, etc. 

Blockchain also supports the decision-making of logistics operators. Developing a business process with the help of Blockchain would fulfill the main task of logistics, which means bringing the goods to the right place at the right time in the right amount and in the original state. Where transparency is the need of the hour, logistics companies can implement decentralized concepts of Blockchain for this purpose for better traceability.

Besides, Blockchain is considered the solution for connecting and managing IoT devices reliably; in that context, logistics might be one of the most promising fields of application since there are many possible IoT objects in a logistics environment such as vehicle shipments, etc. Moreover, Blockchain connected IoT devices could also make use of cryptocurrencies that enable them to interact autonomously with other parties through smart contracts for payments by themselves.

Related post – What you need to know about Blockchain data storage

Reasons Why Blockchain in Logistics industry is a viable solution

Decentralization

Decentralization is the very core idea of Blockchain technology. With the current logistics industry, all the suppliers and procurement officials become their own silos of information. Thus there is no 100% assurance that the information they are sharing is 100% authentic or not. However, the Blockchain breaks down this very concept of silos. By decentralization, we mean that any stored data inside the Blockchain is not owned by one centralized entity. However, it is shared by everyone, whoever is part of that Blockchain network.

Immutable

Immutability means non-tamperable. As mentioned, any data that you put inside the Blockchain cannot be tampered with. This is due to cryptographic hash functions. Hashing means taking an input string of any length and giving out an output of a fixed length.

Transparency

In the Blockchain system, an object’s real identity is secured, while you will still see all the transactions using their public address. This level of transparency adds an extra level of accountability, which is much needed in financial transactions.

Easy Scalability

Since there is no central authority of the Blockchain, it is easily scalable. Thus any number of participants can access virtually from any number of touchpoints and be added to the process.

Smart contract

Blockchains in logistics leverage digital contracts that flow across enterprises. Besides, it integrates with banking systems. In the blockchain smart contracts logistics system, the terms are payable upon receipt, where proof of delivery from a logistics carrier triggers immediately. This also facilitates digital invoicing and payments without any gap between the supplier and the customer. So, such digital contracts through Blockchain integrates banks and logistics across enterprises. This brings a radical change in overall capital needs and simplifies financial operations.

Transparency and traceability

Whatever the product in the logistics pipeline, consumers always want that in good shape and quality. Thus authenticity at each stage of the move is necessary with proper tracking of relevant data. Blockchain, which is nothing but a distributed database, records each transaction on a block across multiple ledger copies. In fact, logistics in Blockchain works as a digital ledger. Hence, it is not difficult to find the correct journey path of goods from origin to touchpoints with Blockchain.

Additionally, the time stamping on the product provides an extra mile of the product history’s truth. Thus Blockchain for logistics traceability and transparency is unparalleled service. Besides, it enables useful information sharing on other associated tasks related to manufacturing, logistics, and transportation. Moreover, it has several benefits like improved product safety, increased forecasting accuracy, a reduction in fraud, and collaborative planning within the industry.

Areas where Blockchain can improve Logistics industry workflow

As per the research conducted by Hackius and Peterson about Blockchain in logistics, they enquired on various use cases to the logistics professionals through an online survey. The use cases were on: barriers, facilitators, and the general prospects of Blockchain in logistics. The survey received positive replies from the logistics professionals about the positive impact of Blockchain technology on logistics parameters. Blockchain ensures transparency as the participants enquire about the transaction data in the Blockchain. Additionally, data in the system is protected by encryption algorithms and distributed data storage. 

The survey concluded four major benefits of Blockchain in logistics, and they are- 

1. EASE PAPERWORK PROCESSING (global container shipping involves a lot of paperwork—costing time and money. Also, freight documents are prone to loss, tampering, and fraud);

2. IDENTIFY COUNTERFEIT PRODUCTS (counterfeit medicine is a growing problem for pharmacy supply chains. This especially pertains to expensive, innovative medicine like cancer drugs. Pharmacies must make sure to sell “the right thing” to the consumers);

3. FACILITATE ORIGIN TRACKING (in the food supply chain, foodborne outbreaks are a challenge for retailers. They must get a quick overview of where the food came from and which other products are also affected and must be removed from the stores);

4. OPERATE THE INTERNET OF THINGS (logistics objects are equipped with sensors that generate data along the supply chain—e.g., about the status of a shipment. This data must be stored in an immutable, accessible way).

[ source: sustainability-11-01185.pdf]

Final Verdict

Finally, blockchain technology can address the challenges encountered by the logistics sector successfully and minimized or even eliminated them with sustainability. Though there are several challenges associated with Blockchain technology, it consumes high energy and has scalability issues. However, the advantages of blockchain technology implementation may be increased. This technology can facilitate logistics tasks: it can be used to track purchase orders, order changes, and freight documents, and it can help in information sharing about the manufacturing process and delivery. Blockchain technology has vast potential for development and application in the logistics sector, presenting challenges for further research.