Logistics is considered a lucrative sector, but many logistics companies have missed a significant proportion of profits because of unnecessary expenses, inefficient practices as well as cyber-attacks. Stolen, misshipped, and mislabeled cargo alone accounts for approximately $50 billion in annual losses. This, therefore, poses a challenge for such owners to find ways in order to improve the situation. Fortunately, Blockchain Technology can be a game-changer. This distributed ledger would help the related parties meet the demand quicker and more convenient delivery of a wider variety of commodities, etc. To learn more details about how Blockchain In Logistics has been revolutionizing this industry, let’s keep reading this blog!
1. Blockchain In Logistics Offers Real-time Tracking And Inventory Management
One of the biggest challenges of the Logistics Industry is visibility as this sector involves a huge number of related parties as well as goods and commodities. In traditional transactions, visibility was provided to only two parties of a specific transaction. For example, it was difficult for a wholesale operator to know whether their materials had been shipped to the manufacturer or when the final products would be delivered. When goods pass from one party to another through different management systems, this can disrupt the flow of data. Moreover, to keep track of any data, every party has to access many different platforms, which is no doubt both time-consuming and costly to maintain. Luckily, blockchain technology is an effective solution for this problem, which can provide end-to-end visibility.
With the chronological order of data, blockchain technology allows recording every step of the order fulfillment or delivery process, and such information can be shared with everyone in the network. It means that real-time tracking is possible, the receivers would estimate delivery time to know when the goods would be shipped to their destination while the senders would keep track of the current status, such as its route, processing, and storing. To sum up, thanks to the Blockchain Implementation in Logistics System, all participants can stay up-to-date with the transaction status at any time and anywhere.
2. The Integration Of Blockchain In Logistics Lowers The Administration Costs And Prevents Counterfeit Products
There is no doubt that physical paperwork tends to be costly, difficult to track but easy to lose, which sometimes even leads to huge slowdowns in transportation and delivery as information is not readily available. However, when adopting Blockchain in Logistics, its decentralized characteristic allows every information and data, such as consignment note, list, and waybill, to be distributed so that all participants involved in the network can easily get access to it. According to research, the price for processing and administration was roughly 20% of transportation’s overall costs because of over-reliance on paper transactions. However, since the application day of blockchain networks, such logistics companies can save up to $500 billion each year. Many large retailers such as Alibaba and Amazon have already integrated with blockchain to make their cross-border operations more efficient.
Furthermore, as all the important information and documents are recorded in the blockchain network, related parties can trace the origin of the goods and confirm their authenticity, hence discovering the counterfeit and damaged products. According to WHO data, the number of people who die every year due to fake drugs is almost 1 million. 1% of drugs in developed countries and 10% of drugs in the world are fake. Another 8.5% of all pharmaceutical products simply spoiled because of inadequate transportation conditions. However, thanks to Blockchain, anyone can access the network to find out the origin of the product, such as manufacturer, lot number, expiration date, transportation data, etc. As a result, they would easily check whether the delivered products are real or not.
3. Blockchain Smart Contract Allows Automated And Transparent Transactions
As a characteristic of the logistics sector, almost all global trade businesses would utilize phone or e-mails instead of involving face-to-face contacts. Therefore, the trust issue is a problem that calls for a suitable solution. If your business has a long-term relationship with a trading partner, the risk of refusal of the cargo handover, non-payment, or fake documents and information can be low. By contrast, in case you form a new relationship with another organization that you have never worked with before, trust is a major and valid issue. And in such circumstances, two parties always relied on a mediator to reduce risks. However, thanks to applying Blockchain Smart Contracts, the aforementioned problems can be solved.
With smart contracts, agreements can be automatically validated, signed, and enforced as long as some specific conditions embedded in the code are met, which declines the need for intermediaries, and as a result, saves time and brokerage commission for this Logistics Company. Moreover, once a document is recorded or registered on the distributed ledger, there is almost no way for any third-party to change the details. The modification can take place just when every single other blockchain in the system is changed. Therefore, the accuracy of all documents is always guaranteed, and the transparency of transactions can enhance. Besides, blockchain can unite a huge logistics network to become decentralized and integrated into a current ERP system. These two attributes, when kept together, can improve the automation of the logistics industry.
4. Final Thoughts
It is no exaggeration to say that Blockchain is the future of the logistics industry. This advanced technology would solve all the existing problems, reduce costs as well as enhance transparency which restricts the growth of the sector. Especially, when integrated with other digital transformations, such as Cloud Logistics, AI and Machine Learning Adoption, the Logistics Sector would definitely go up to a high level.
With the aim to leverage Blockchain Technology In Logistics to improve operational efficiency, hundreds of Logistics Corporations/ Organizations/ Start-ups may raise the questions related to “What companies are developing Blockchain?” or “How much does it cost to develop Blockchain?”. As a leading blockchain development firm in Vietnam, our SotaTek specialists are dedicated to analyzing your case and bringing you the top Blockchain Solutions. So, please contact us right now for further information and we can empower your Logistics Business by providing bespoke data management and tracking solutions based on blockchain technology.
Now, let's take a look at the infographic below to once again acknowledge the Benefits of Blockchain in Logistics (Source: Chetu - Technology Blog)