As the foundational technology for cryptocurrencies and, more recently, as a data storage solution with the potential to have a significant and fruitful influence in conventional industries like finance, manufacturing, healthcare, and education, blockchain has drawn a lot of interest.
In this blog, we’ll concentrate on the benefits of blockchain technology for the logistics sector and how it affects that sector. But, first, let’s start by understanding what blockchain is.
What is Blockchain?
Blockchain is a distributed database technology that stores digital information records securely and transparently without needing a centralized control system. The technology was initially created as the accounting system for the digital currency Bitcoin, but it is now primarily used to code and insert almost any document into the blockchain, as well as to verify transactions between digital currencies. Doing this produces a permanent, immutable record. In addition, instead of relying on a single centralized authority, the blockchain enables the entire community to verify the document’s authenticity independently.
Besides the use of blockchain technology to power cryptocurrency networks, there are other use cases of the technology. But before we talk about the implementation, there are several unanswered questions regarding the future of blockchain, like when it will be integrated into the traditional industries and when it will provide fruitful outcomes. Although, we are close to answering these questions. Recently, we have seen the integration of blockchain in various sectors, like healthcare, education, media & entertainment, and logistics.
With more stakeholders involved in supply chains directly or indirectly, logistics is becoming more and more complex. Several issues along the supply chain are impacting the effectiveness of logistics functions. The location of packages is frequently unknown while they are being transported, making it challenging to plan delivery timeframes and underusing the resources of businesses. Additionally, establishing a reliable audit trail is becoming more critical due to rising sustainability expectations. However, tracking products across the whole supply chain can be challenging.
Additionally, various logistics operations are still tracked by hand and on paper, which might result in lengthy processing delays. Because of these issues, this complexity demands end-to-end visibility and communication; logistics operations are becoming less effective. As a result, the demand for transparency and dependability in the sector is rising among all supply chain actors simultaneously. Blockchain is becoming a potential answer to these problems.
How can blockchain change the face of Supply Chain?
Blockchain in logistics can be employed to manage the supply chain more efficiently; parties can keep track of price, date, location, quality, certification, and other pertinent information using a blockchain. The availability of this data on the network can improve visibility and compliance over outsourced contract manufacturing, increase traceability of the material supply chain, reduce losses to grey market and counterfeit products, and possibly strengthen an organization’s position as a pioneer in ethical manufacturing. Let us understand how blockchain can revolutionize Logistics:
- Improved Freight tracking
The primary use case of blockchain in logistics is to track the shipment transparently, i.e., by all parties involved. Commercial transportation companies have an ever-increasing demand to innovate as the need for same-day delivery rises and consumer expectations rise. Blockchain networks can contribute and confirm data by leveraging the blockchain for data authentication, making it impervious to tampering. Increased tracking data dependability can also help in reducing the spoilage of perishable goods.
Organizations involved in Logistical operations usually maintain paper-based and manual records. Numerous parties are involved in the process, which amounts to loads of paper-based handwritten data. This causes a huge issue when it comes to invoicing. Companies spend a lot of time matching invoices with payments that are due or that have been credited. Blockchain can enable smart contracts that automatically handle bills and payments, reducing processing times, ensuring correctness, and preserving and sharing digital data.
- Tracking Fleet & Vehicle performance
The value of tracking extends beyond delivery effectiveness. It also applies to the efficiency of particular vehicles in a fleet. For example, the blockchain can assist in authenticating data on the past performance of the vehicle and its maintenance history when a business wishes to buy a used delivery-service vehicle. Additionally, a company with a massive fleet of vehicles can easily track the performance of the vehicles they own.
- IoT and AI with Blockchain Integration
Blockchain can benefit capacity monitoring and environmental control if integrated with IoT. For example, the price of shipping freight is frequently proportional to the cargo volume. Shippers and transportation providers can assess the cost of a package based on the amount of space it takes up using IoT sensors in trucks and other shipping vehicles and can then send this data to the blockchain.
For instance, when the COVID-19 vaccine was introduced, there was a wave of relief worldwide. But one major issue that sustained was how to transport these vaccines far and wide across the nation. The vaccine had to be transported in a temperature-controlled environment. The logistics of various pharmaceutical drugs require special vehicles and transportation modes for temperature control. This increases the administrative cost and poses the risk of spoilage due to changes in temperature across various areas. Hence, using blockchain, stakeholders can track and control the temperature of the containers.
Blockchain will revolutionize the logistics industry in the future. Mutual confidence between participants will improve the efficiency of the transaction verification process and contribute to the timely delivery of products and services. However, it can take several years to fully integrate this procedure into logistics.
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn’t represent any investment advice or WazirX’s official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.