Blockchain – How Can We Use it in Transportation?
The last two articles have looked at how a Blockchain works. For any of you that missed those articles, a high level summary is that a Blockchain acts as a shared ledger system that tracks and monitors all transactions. Every transaction is interconnected to both the previous and the subsequent transactions using mathematical formulas. Because of this interconnection, any changes or revisions to the ledger are obvious as certain checksums will no longer match the original transaction. This results in all parties to the ledger having a high degree of trust in the data because of these checks and balances.
Now for the money question – what does this mean to the transportation industry?
In short, accountability and transparency are two of the largest items, and they both contribute to enhancing the level of trust between all parties to the transaction.
Fraud detection is a very basic thing that a Blockchain can prevent. Every transaction takes place is visible to all parties to the Blockchain and nothing can be removed. As a result there is a high degree of accountability provided. Any changes or revisions will be part of the record. This transparency in turn removes the opportunity for fraud. As an example, unauthorized double brokering (or if the contract forbids it, any brokering) could be eliminated. There would be a clear line of events showing the tendering of the load to a carrier or logistics company. If that company decides to broker the load out, the carrier it goes to becomes part of the record and it will be visible to all parties. If that carrier then decides to double-broker the load, it will become obvious to everyone fairly quickly. So, that company that took your load and then turned around and gave it to someone else, just got caught. You as the original carrier/broker may decide to allow this, but you get the choice, you keep control and the entire process plays out in a transparent way. Now the shipper knows what carrier will be coming to load their product and who will be making the final deliver to the customer. Additionally any carrier selection requirements (insurance, safety record, etc.) can be cross checked to ensure that any carriers used by the broker meet the same qualification standards as the party that the load was originally tendered to.
Supply Chain Transparency
A further use will be maintaining compliance with the myriad of new rules and regulations such as FSMA (Food Safety Modernization Act). The entire chain going from production on the farm, to the processing plant, to the truck, and finally to the distribution center could all be tracked. Any tracking or monitoring data could be tied into the Blockchain (for example, if you have a reefer with a mobile tracking system that can track the temperature of the load). Additionally the condition of the load can be tracked at each hand-off. What this gives is clear line of evidence at to where any issues may have occurred. Consider what would happen if you were hauling a load of fresh meat and the final receiver rejects the load. If the data your company provided to the Blockchain shows the condition that the product was loaded onto your trailer and that your temperatures did not deviate from the shipper’s instructions, then everyone will have the evidence that shows that the trucker did their job properly and thus should not be the target of a claim.
For standard dry freight, there is now a clear trail of the condition of the merchandise as it goes from shipper to cross-dock and so forth. For people doing LTL (especially if you do any interlining) this will be of great importance when it comes to OS&D. However, it will mean that your dock staff need to take even greater care in doing piece counts and inspecting the condition of everything that enters and leaves your dock. In fact photographing the condition of the goods may become an additional step in providing evidence. You may even consider going to the step of having your drivers photograph the condition of the goods at pick-up. This will all get entered into the Blockchain and all parties will get to see where any claims were caused and deal with the correct party. Some skids of product could be handed off to multiple carriers on their way across the country – possibly more if the originate in Canada or Mexico. This eliminates unnecessary “he said, she said” disputes made by an end receiver. A quick scan through the ledger will show the condition as it passed through each carrier and/or terminal. Additionally this will require us as an industry to put further pressure on shippers to allow our drivers onto docks into order to inspect both the condition of the freight and how it is secured. However, if a shipper refuses to allow this to happen and seals the trailer themselves, that part of the transaction will be recorded and becomes part of the chain.
The big picture view is that while there will be additional accountability on our industry, but it will be a shared accountability. If a carrier is already doing things right, this Blockchain WILL improve their profitability.