Will Blockchain Technology Make Logistics The Best Ever?

Logistics is not a new industry: the transport, storage and delivery of goods has been a mainstay of civilization since ancient times. Of course, logistics have evolved with time and the advancement of technology. Over the past decade, demand for logistics has skyrocketed globally thanks to the rise of e-commerce, and the pandemic has further accelerated its adoption. During the months of lockdown, consumers got used to the essentials being delivered right to their doorstep, within hours of ordering.

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

Supply chain experts are now brainstorming new ways to incorporate the best of modern technology with logistics, further optimizing the booming industry. Moreover, the complexity of the supply chain increases with more and more stakeholders entering the scene, directly or indirectly. Technology such as artificial intelligence (AI) is already helping to improve speed and efficiency. Meanwhile, blockchain has been considered 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 of India, there are many more successful use cases of blockchain technology in last mile deliveries. Netherlands-based Geeba uses blockchain to automate pickup and delivery via drones and droids through smart hubs. FedEx has committed to blockchain to resolve customer disputes by sharing detailed information to both sender and receiver before pickup and after delivery. Visa has also experimented with blockchain technology in its B2B Connect Payment service.

Startups in certain Asian countries like South Korea are also experimenting with blockchain technology to make the delivery process seamless and foolproof. They have created centralized delivery platforms and matching couriers 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 reducing the chances of trade counterfeiting and payment disputes.

So far, the use of blockchain has been limited in logistics, with only 5 percent 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 may emerge as a solution to this, as it appears to be a natural convergence of trust as it shares commonalities as multiple parties. With increased transparency, blockchain can also help stakeholders detect fraud at a specific point in the supply chain process, reducing the chances of theft or embezzlement. Also, payments, transfers, updating of last-mile pickups and deliveries, etc. can be done using smart contracts.

Best use cases of blockchain in logistics

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

High value inventory tracking

FMCG business giants such as Walmart, Unilever, Nestle have partnered with IBM to develop an advanced food tracking system using blockchain. The concept has already been tested in China and Mexico, where Walmart successfully tracked meat and mangoes to identify spoiled/infected batches of food. Blockchain also helps in tracking the origin of drugs, transport of medical drugs and procurement of these raw materials. If implemented worldwide, blockchain-based inventory tracking could help with better stocking of high-value goods.

Secure invoicing and payments

Blockchain-powered smart contracts can come in handy to facilitate cross-business transactions and payments. For example, fintech firm Tallysticks has developed a blockchain-based software that can handle invoicing and payments for other businesses.

Fraud detection

With customer demand in mind, Everledger has deployed blockchain in the diamond industry to verify the authenticity of the gems. They track each diamond to determine its origin and the information is passed on to end customers. In the long run, this policy could reduce counterfeiting and prevent illegal trade.

Improved supply chain transparency

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

Fair freight market

Blockchain-powered shipping platform ShipChain introduced a system that uses transparent blockchain contracts that can be easily integrated with other systems in use. The goal is to unify tracking across multiple shippers and eventually use the database to build a decentralized marketplace, where companies can choose a shipping partner based on transparent data about their costs and past performance.

Dispute resolution

Delayed deliveries, misplaced orders or damaged shipments can cause many customer disputes, ultimately reducing a company’s reliability. FedEx has committed to blockchain to resolve customer disputes by sharing detailed information to both sender and receiver before pickup and after delivery.

Roadblocks for blockchain in India’s last mile

The primary obstacle to active use of blockchain in Indian logistics is the lack of knowledge, the amount of energy consumed in running it and is seen as a threat by some financial institutions. All in all,

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

• The absence of a standardized blockchain solution can make it difficult for different parties to cooperate and benefit from each other.

• There is not much data on the successful implementation of blockchain solutions in logistics, except for some very specific use cases in India.

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