In this article, we will try to describe in more detail the application of blockchain technology in logistics and transportation. Initially, blockchain technology emerged as a platform for Bitcoin, the first cryptocurrency in the world. However, today it offers a lot more – it has evolved over the years and is now proving its effectiveness as an independent unit. In essence, a blockchain is a decentralized register of transactions or, in other words, a decentralized trading platform in a distributed network infrastructure. This means that the technology can also be useful in the field of logistics and transportation, which is being actively tested by the companies.
How Blockchain Logistics Could Enhance Transportation?
Blockchain, that is, a sequence of blocks, can also be described as a distributed database. It has the potential to change the way companies operate, especially those currently suffering from a lack of supply chain transparency.
Thus, when the supply chain is extended, it is difficult to get a complete picture of transactions made by suppliers, subcontractors and customers. The end user can experience difficulties with the process of tracing the path traveled by the individual elements that make up the final product. And with ever increasing competition, as well as enhanced technical products, this often becomes necessary.
That’s why logistics blockchain could bring a lot of benefits to a large enterprise with a large number of suppliers, franchisees and other stakeholders. The transactions of such corporate giants should be constantly and closely monitored.
How Is Cargo Delivered Using Blockchain?
The sender uploads the documents necessary for the transportation of cargo to a special online storage. After this, there appears a pointer to where the data about this cargo is stored, and this pointer joins a chain of blocks. With the help of special software, operations with goods are recorded at each stage of their way. For example, a warehouse employee confirms the delivery of a shipment with a signature, which is a unique code. They can do this even from their smartphone – all they need is a dedicated app. All participants have a private key that allows to identify senders and recipients. This is also an encrypted code.
Thus, by using the blockchain, the parties exclude fraudulent transactions: thanks to cryptography, the seizure of cargo by transferring it to another person is impossible. This is especially important when delivering valuable goods like medicines.
The whole delivery process using this technology is faster and cheaper (document flow is reduced), which means that the company benefits financially. Although this seems reasonable, companies might be reluctant to implement blockchain technology as they don’t know it well enough. In this case, there exists blockchain advisors that will help with managing the process.
Blockchain Technology As Means To Combat Counterfeiting
Blockchain architecture can also be used to limit the amount of counterfeiting, and thus help restore consumer confidence in logistics operators.
How can blockchain technology help prevent counterfeit products? First of all, companies need to decide on whether to use public vs private blockchain. Each cell in the chain of blocks contains some information. As the availability of data increases, so does the number of blocks. In relation to supply chains, the “cells” in question may contain information about goods, manufacturer, packaging, details of transportation, distribution at the destination, etc. Throughout the process, “cells” of data will be constantly built into the chain. A feature of the blockchain is the connection of blocks with each other.
Each block contains a unique digital identifier and a link to the previous block, while the entire chain is encrypted. The chain itself is duplicated on all computers that are part of the blockchain network. Each time a new block is added, the encryption of the entire chain is updated, and the already updated chain is replicated throughout the network. As a rule, depending on the architecture, each step of encryption and replication takes about 10 minutes. Data protection in the blockchain is ensured by the encryption procedure and duplication of the chain throughout the network.
There is no need to worry about the integrity and reliability of the data, since this problem is solved by the blockchain technology itself. Data protection is ensured by the encryption procedure and chain duplication throughout the network. If someone wants to change the information contained in one of the blocks, he will have to re-encrypt all the new blocks in the chain, not once, but for each copy on all computers in the network. Given that it takes ten minutes to process one such task, this operation is simply not feasible in practice.
The complicated nature of logistics processes demands the companies to look for new technologies to improve existing systems in place, reduce costs and increase supply chain transparency. Blockchain technology offers a solution to most of the current problems. Of course, there are certain issues associated with the implementation of the blockchain, but the more companies will start moving in that direction, the more examples of successful implementation we will see. There are a number of effective implementation strategies that are currently being tested, and logistics is likely to change forever as more organizations get involved.