Will Blockchain Technology Make Logistics the Best Ever?

Supply chain experts are brainstorming novel ways to incorporate the best of modern technology with logistics, and further optimize the thriving industry

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Logistics is not a new industry: transportation, storage and delivery of goods has been a mainstay of civilization since ancient times. Of course, the modes of logistics have evolved with time and the advancement of technology. In the past decade, the demand for logistics has skyrocketed globally thanks to the rise of e-commerce and the pandemic has accelerated its adoption further. Throughout the months of lockdown, consumers became accustomed to essentials being delivered right to their doorstep, within hours of placing an order.

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However, world-over, the most common delivery challenges can be boiled down to the lack of two factors: technology and transparency. Logistics companies are adopting novel technological innovations in their last-mile logistics, as more than 56 per cent of customers today insist on having full visibility on their orders.

Supply chain experts are now brainstorming novel ways to incorporate the best of modern technology with logistics, and further optimize the thriving industry. Moreover, the complexities in the supply chain are increasing with more and more stakeholders coming into the scene, directly or indirectly. Technology such as artificial intelligence (AI) is already helping to improve speed and efficiency. Meanwhile, blockchain has been deemed as a viable solution for more transparency and visibility in logistics. In fact, blockchain can even complement AI in paving a new direction for logistics in certain use cases, such as the tea/coffee supply chain.

Outside India, there are many more successful use cases of blockchain technology in last mile deliveries. Netherlands-based Geeba is using blockchain to automate pickup and delivery via drones and droids through smart hubs. FedEx has undertaken blockchain to resolve customer disputes by sharing detailed information to both sender and receiver before pickup and after deliveries. Visa has also experimented with blockchain technology in their B2B Connect Payment service.

Startups in certain Asian countries such as South Korea are also experimenting with blockchain technology to make the last-mile delivery process seamless and foolproof. They have created centralized delivery platforms and matching messengers for order delivery using AI and smart contract based applications. A number of multinational shippers are also testing the applicability of blockchain to maintain paperless transaction records in a distributed ledger, thereby lowering the chances of trade counterfeits and payment disputes.

So far, the adoption of blockchain has been limited in logistics, with only 5 per cent of companies showing interest in the technology globally. Brands with high-value goods such as military, electronics and pharmaceuticals have been the early adopters of this.

Lack of digitization and visibility in the supply chain is an age-old problem. Blockchain can emerge as a solution to this, as it appears to be a natural convergence of trust since it has commonalities like multiple parties. With increased transparency, blockchain can also help stakeholders detect fraud at any particular point in the supply chain process, reducing the chances of theft or misappropriation. Moreover, payments, transfers, updation of last-mile pickups and deliveries, etc., can be executed with the help of smart contracts.

Best use cases of blockchain in logistics

Around the world, blockchain technology has already started redefining the scope of the logistics industry. With its long list of real-world applications, blockchain has been adopted for different purposes by many leading e-commerce and logistics companies.

High value inventory tracking

FMCG corporate giants such as Walmart, Unilever, Nestle have partnered with IBM to develop an advanced tracking system for food items with the help of blockchain. The concept has already been piloted in China and Mexico where Walmart successfully tracked meat and mangoes to identify spoiled/infected batches of food. Blockchain also helps in tracing the origin of pharmaceuticals, transport of medicinal drugs, and the procurement of these raw materials. If implemented worldwide, blockchain based inventory tracking can help in better stock keeping of high value items.

Secure invoicing and payments

Blockchain-powered smart contracts can come in handy to simplify transactions and payments across businesses. For instance, fintech firm Tallysticks has devised a blockchain-based software that can handle invoicing and payments for other businesses.

Fraud detection

Keeping customer demand in mind, Everledger has deployed blockchain in the diamond industry, for verifying the authenticity of the precious stones. They track each diamond to establish its origins and the information is provided to the end customers. In the long run, this policy can reduce counterfeits and prevent illegal trafficking.

Improved supply chain transparency

Sustainability marketing brand Provenance collaborated with a coconut importing company from Indonesia to prove how blockchain can improve transparency in the supply chain. Using blockchain, they developed a foolproof system which ensured that all coconut farmers get fair compensation. This added transparency ultimately helped the coconut brand grow as their customers got impressed by the fair trade practices. Many other B2B logistics companies are also trying to incorporate blockchain in their supply chain to achieve similar objectives.

Fair freight marketplace

Blockchain-powered freight platform ShipChain introduced a system which uses transparent blockchain contracts that can readily integrate with other systems in use. The goal is to unify tracking across multiple shippers and ultimately use the database to build a decentralized market, where companies can choose a shipping partner based on transparent data on their costs and past performance.

Dispute resolution

Delayed deliveries, misplaced orders or damaged shipments can cause a lot of customer disputes, eventually bringing down a company's reliability. FedEx has undertaken blockchain to resolve customer disputes by sharing detailed information to both sender and receiver before pickup and after deliveries.

Roadblocks for blockchain in India's last mile

The primary hurdle in the active adoption of blockchain in Indian logistics happens to be the lack of knowledge, the amount of energy consumed on running it and being considered as a threat by some financial institutions. Overall,

Lack of understanding and awareness of blockchain among the stakeholders in a supply chain and logistics operators.

  • Absence of a standardized blockchain solution can make it difficult for different parties to collaborate and benefit from each other.
  • There is not much data on successful implementation of blockchain solutions in logistics, aside from some very specific use cases in India.

With the launch of Open Network for Digital Commerce (ONDC) by the Indian government, there is hope that we will witness further adoption of blockchain in the digital commerce and logistics space. In fact, ONDC itself is a blockchain-based protocol which aims to create a fair and transparent marketplace for small and medium-sized businesses across India. With Blowhorn being one of the early participants of ONDC, we too are waiting and watching the best use case for blockchain in our fulfillment services in the near future to help our customers.