The problems blockchain are addressing.
From dispute resolution to administrative efficiency and order tracking, blockchain has the answer to the problems that have been plaguing the transportation industry for decades.
Let’s explore some of these issues.
- Every day, there are billions tied up in disputes for payments in the transportation industry.
- Processing and administration costs have risen to as high as 18% of transportation’s overall costs, due to over-reliance on paper transactions and out-date technologies.
- 89% of trucking companies have six trucks or fewer. This causes the industry to struggle with matching shippers (demand) with carriers ( supply).
How blockchain enables efficiency and cost-saving in business operations for the Industry.
Let’s explore the ways blockchain technology is already improving the industry:
- New Blockchain-enabled platforms will allow easy coordination of documents on a shared distributed ledger, making physical paperwork largely unnecessary.
- By using smart contracts, approvals and customs clearance can be quicker and more efficient, reducing processing times for goods at customs checkpoints.
- Organizations need updated, secure and authentic data to make decisions. Blockchain ensures trustworthy data across the transportation and logistics ecosystem, since the entire network contributes to data validation.
- With rising demand for same-day and one-hour delivery services, traditional tracking technologies will not scale. Blockchain technology provides a scalable, immediate solution for order tracking and authentication.
Is Blockchain And the Logistics Industry a Match Made In Heaven?
Companies in the logistics and transportation industry sink or swim based on their ability to adapt to consumer needs, and implement new technologies that help them increase efficiency and lower the costs of shipping.
In the past year, blockchain technology has emerged in the world of trucking and logistics as a solution to some of the major inefficiencies that have plagued the industry for decades.
But there’s one problem:
For most business owners, blockchain is no more than a buzzword, and its applications can be obscure and difficult to understand.
It’s all over the news and it seems to be taking over and revolutionizing every industry.
But what is blockchain technology? And more importantly, how can it be applied to the transportation industry in a way that benefits both business owners and consumers?
In this post, we’re going to explore how blockchain addresses some of the major issues in trucking and is set to revolutionize the industry.
Why Has Blockchain Crossed Into the World of Transportation and Trucking?
20 years ago, if you were to tell a trucking expert about the amount of innovation that would hit the trucking, logistics and transportation industry over the next two decades, they would be ecstatic.
If you were to tell that same expert the level of demand for same day shipping and the volume of online transactions leading to expedited delivery, they would be speechless.
The industry has come a long way.
Technological and procedural developments in logistics have bolstered the transportation industry’s ability to efficiently service an all time high in demand — all while adjusting to an evolution in consumer preferences and expectations concerning delivery time and cost.
Even so, the trucking industry is far from perfect.
And that’s where blockchain technology comes in to save the day.
Let’s explore some of the key areas in which the industry struggles in terms of efficiency, cost and service to the end user.
Opportunities For Improvement In The Trucking Industry
Transportation Payment And Dispute Resolution
Every day, there are billions tied up in disputes for payments in the transportation industry. To put things into perspective, that’s equivalent to the GDP of a small country.
For an average invoice, a company must wait 45 days on average before receiving payment. Many businesses have millions of dollars tied up in their accounts, which they could be using to advance their business, improve delivery times and better serve end users.
Administrative Costs
Processing and administration costs have risen to as high as 18% of transportation’s overall costs, due to over-reliance on paper transactions.
IBM and Maersk performed an experiment where the companies tracked a shipping container of flowers from Mombasa, Kenya, to Rotterdam, the major port in the Netherlands.
They found that just a simple refrigerated shipment went through more than 30 different organizations and required over 200 separate communications. Any lost form or delayed approval could hold up the container in port indefinitely, or get it lost altogether.
LTL Inefficiency
90 percent of trucking companies worldwide have six trucks or fewer. This causes the industry to struggle with matching shippers (demand) with carriers (supply).
Due to this issue, it’s estimated that truckers drive 29 billion miles per year with partial or empty truckloads. In case you were curious, that’s equivalent to just over a million trips around the full circumference of the earth.
This inefficiency in consolidating LTL loads costs trucking companies millions of dollars every year. It also raises shipping costs for consumers