Blockchain is one of the technological novelties already used in logistics. Until recently, most projects using this distributed model of information gathering were at the concept stage. The time has come to turn the concept into action. Will blockchain make paper documents go out of date?
Blockchain is the so-called distributed register. The technology saves the same information to all participants of the system and whatever has been coded in it remains permanent. The record cannot be deleted or falsified. You can make changes, but they are approved according to specific rules, which must agree with the code of other registers. Therefore, you cannot fake information by breaking into only one of the elements of the system. This way of saving data is to be a guarantee of security, some specialists even call it a guardian. According to analysts from MarketsandMarkets, the market for this technology has enormous potential. It reached the value of over USD 400 million last year, and in three years it can be up to fifteen times larger.
Blockchain can improve transparency and identification in the supply chain by using a fraud-proof, distributed database and controlled access. It will enable the collection of key information on the origin of each individual ingredient used in the process. This means a new level of transparency and security” – explains Piotr Rojek, Managing Director, DSR.
Blockchain is a distributed data structure that allows you to create and share digital transaction tags. It creates a transaction history and records details of goods that have been uploaded to the database. Modern tools to track RFID tags in blockchain are already being offered. You can follow and monitor, for example, food or medical supplies and pharmaceuticals. It is important to be able to check the authenticity of the goods, storage conditions (i.e. temperature and time). Among the benefits are: attention to the right quality of the product; sefety for customers (the product is safe to use), but also simpler logistics, including a faster response to emerging problems (i.e. damaged or defective goods can be identified earlier). The solution can significantly prevent human errors and prevent the shipment of defective goods.
Product tracking is also the guarantee of the product originality (it is estimated that in some industries even 20-30 percent of the supplied products are counterfeited). Distributed databases ensure that unique product identifiers are stored along with attributes that are updated by subsequent intermediaries. QR code scanners, software operating in the cloud and access to the Internet at subsequent points in the supply chain are sufficient to implement this technology.
Blockchain is not a „melody of the future”, but a reality
This solution has been adopted by Wal-Mart supermarket chain to ensure the quality and freshness of the food sold. For example, technology makes it possible to answer the following questions at any time: from which farms came the cows used to produce milk; what medical treatments the animals have gone through and what they were fed; in which dairy the given party was established, and finally – in which warehouse the butter was stored before it went to the retail outlet.
Maersk, a well-known container operator, also decided to use such technology in the supply chain. It was implemented in order to help in the management and tracking of containers through the digitization of individual stages of transport: from sending the shipment in the port to its reception at the destination. In addition, thanks to IoT devices (internet of things), the system provides the ability to monitor the status of a shipment. Sensors record, for example, the temperature and humidity level in the container, and the measurements are recorded in the blockchain register. The technology also helps finalize the contracts. Paper documents are troublesome, and their finalization, when signed by entities stationed on different continents, can last for weeks. In turn, standard, digital documents can be easily faked … The answer to the need to automate such processes are so-called smart contracts.
Using blockchain, we can negotiate and create so-called smart contracts with various entities. So once again, new technologies eliminate intermediaries. Insurance without the need to sign a contract with an insurance company, purchase of shares without a broker, bank account without a bank, creation of a legal document without a lawyer? – in theory, everything is possible” – says Artur Kurasiński, technology blogger and creator of MUSE.
With a shared base of digital information distributed among all users, none of the parties can manipulate the arrangements made, and the contracts are executed automatically, without the involvement of intermediaries.
– In the case of automated contracts, the greatest advantages are speed and security. Because smart contracts are automatically enforced, the internet is their natural environment. In the case of factories, smart contacts can be checked, for example, in reserving and buying production materials or services – explains Piotr Rojek (DSR).
Recently, a global supplier of integrated logistics solutions, Agility, joined the group interested in blockchain technology. It is the first forwarding company that, together with Maersk and IBM, is preparing a solution based on this technology to manage and track container shipments. Agility will collect information related to the handling of individual shipments and then transfer this data via a decentralized and distributed transaction register operating in blockchain technology.
The aim is to reduce costs and increase the efficiency of operations, made possible by integrating all information on shipments on one secure platform, available to senders, carriers, forwarders and other companies present in the supply chain.
Blockchain technology reduces transport costs while increasing its safety and reliability. By implementing it at such an early stage, companies such as Agility can help Maersk and IBM to understand the needs of shippers and create standards that will increase the efficiency of commercial operations. We can also show our clients how they can use blockchain to facilitate the monitoring of shipments, reduce the amount of paper documentation, reduce errors or shorten delivery times and customs clearance” – says Essa Al-Saleh, CEO of Agility Global Integrated Logistics.
In general, logistics is a great opportunity for blockchain technology as a secure and fault-tolerant transaction register that can be used to track shipments, create documentation and register payments. Its digital infrastructure makes it possible to connect individual companies in the supply chain, providing them with access to information and the ability to monitor in real time, in accordance with the agreed level of access.
Specialists emphasize that only the costs associated with the administration and archiving of documentation related to the international exchange of goods go into billions of US dollars. The use of blockchain can reduce them, facilitating the location of a given container, showing the status of customs documents, sea consignment notes or other documents. At the same time, it reduces operating costs and facilitates monitoring. The technology can also be used by customs and border guards, providing the information necessary to conduct the hazard analysis.