Crux Systems Insights

Blockchain in the logistics industry: yes or no?

July 10, 2018 by Kathleen Kong |


While blockchain has been more commonly associated with cryptocurrencies like Bitcoin, it's now being used in the logistics industry with increasing frequency. But where does blockchain make the most sense for the supply chain? 

First, the basics. Based on a decentralized system, blockchain records each transaction on a block, which is linked and secured with cryptography to other blocks in a chain. It provides a more transparent, secure, efficient, and scalable platform to track records, since no one part can be altered without agreement from the others.

To figure out how to apply blockchain in logistics, let’s review some of the common pain points.

1. Time consuming processes: most of the parties involved in coordinating shipments are dealing with multiple systems, paperwork, and spreadsheets to manage their cargo, and communicating with emails and phone calls. All of this is inefficient, and ultimately results in missing, outdated, or inaccurate information. 

2. Blind spots in supply chain visibility: visibility into one part of your shipment's journey isn't enough. A lack of visibility into the status of your cargo at a terminal, for example, can result in costly delays. 

3. Stuck in the past: the difficulty of accessing data locked away in separate silos and the reliance on outdated technologies for communication has created massive inefficiencies. It's also created an opportunity for innovative companies to change the game. 

Given these challenges, is blockchain the right technology for bringing revolutionary change to a traditional industry like logistics?

In areas dealing with contracts, payments, and insurance, the use of blockchain could enable more transparent transactions and faster payments. But blockchain is also being used in other ways. 

Earlier this year, IBM and Maersk announced a joint venture that will use blockchain to digitize paper-based transactions and enable parties to securely share information, with the aim of streamlining global trade.

In the freight business, Fr8 Network is using blockchain to develop solutions for carriers and shippers to manage their shipment contracts.  For payments, their Fr8 token can only be exchanged within the community rather than widely used throughout the industry.

Some in the industry have noted that with separate parties developing multiple blockchain solutions, the kinds of efficiencies that everyone would like to see won't be realized unless a solution can be developed in partnership with a broader set of stakeholders. 

With that in mind, membership in the Blockchain in Transport Alliance group has been growing, as more companies in the logistics industry want to be involved in developing blockchain standards for the freight industry. 

While blockchain has the potential to bring more transparency and efficiency to the movement of goods around the world, it's not a perfect solution. To truly solve these kinds of issues in logistics, what matters more than the specific technology is the ability to create a global standard. And like all standards, it can only work with universal buy-in. 

For supply chain visibility, we've taken a different approach. We aggregate and normalize data from multiple sources to provide the most reliable information about ocean cargo coming to North America. We don't use blockchain technology for this kind of supply chain visibility and collaboration, because it would actually create unnecessary complexity and make it more costly. 

Instead, we provide visibility through a dashboard and APIs, so those who are a party to a container have the right levels of access to information and control over their data.

Learn more about all the work going on behind the scenes to simplify container tracking for our users. 

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