The revolutionary impact of blockchain technology on the logistics industry

Logistics is often seen as the lifeblood of modern society, and it is estimated that the international shipping industry accounts for about 90% of global trade each year . However, the logistics system behind global trade is highly complex, involving multiple parties, who typically track shipments with different systems of primary interest and priority. Therefore, innovation in trade logistics is likely to have a major impact on the global economy. Clearly, it is necessary for the logistics industry to open larger innovations and new business models through blockchains. They do this by leveraging many of the key features of the technology, including security, asset management, data transparency, and smart contracts, all of which can be used in the logistics industry. To achieve excellence in logistics, you must work with others to optimize the flow of real goods, as well as complex financial transactions and information flows.

The development of technology and procedures in the logistics industry has strengthened the capabilities of the commercial transportation industry to effectively meet unprecedentedly high demands. Although all of this has been adapted to the evolution of consumer preferences and expectations regarding delivery times and costs. But today, there are a lot of value traps in the logistics industry, which is largely due to the fragmentation and competitiveness of the logistics industry. For example, in the United States alone, there are nearly 50,000 independent shipping companies. Because there are so many companies involved in the supply chain, this often leads to low levels of transparency, data processing, non-standardized processes, and different levels of technology adoption. Many parts of the logistics value chain must also follow the manual processes set by the regulatory body. For example, companies often have to rely on manual data entry and paper documents to follow customs procedures. All of this makes it difficult to track the source of goods and the state of the goods in the supply chain, leading to global trade frictions.

Blockchain technology helps overcome these trade frictions and significantly improves logistics efficiency. It also enables data transparency and sharing between relevant supply chain companies to create a unique source of truth. Furthermore, the inherent security mechanisms of blockchain technology enhance the trust required to share information between enterprises. Blockchain can achieve cost savings by providing learners with rights, more automated, and error-free processes. In addition to enhancing the visibility and predictability of daily logistics operations, it also accelerates cargo logistics.

Smart contract and payment method

A smart contract is itself an auto-executed contract written in code and is usually designed to include any funds or information in the contract code itself. Transactions made on the blockchain can be settled immediately. This has the potential to automate transactions throughout the supply chain. For example, a smart contract can issue a designated funds upon receipt of a verification document, indicating that the goods have changed hands. Blockchain technology enables another possibility of interoperability and visibility in the supply chain, much like EDI . EDI is an application interface or web service.

Improve traceability and security

For example, once the goods are shipped, the smart contract will pay the required amount, which can change the ownership of the goods, and the flow of funds will also be reflected in the public ledger. Because the concepts of ledgers and security tools (such as hashing and encryption) are widely spread, new information is not tampered with. In this way, anyone with access to the blockchain ledger can track the location and owner of the product. Organizations can use this tracking system internally, even allowing customers to track related products, even parts of goods. We can expect that the development of the logistics industry using blockchain technology will pay off.

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