The Strategist

The blockchain technology is changing international freight transportation

07/26/2017 - 13:57

Transport logistics is an integral part of international transport. This is a complex system for organizing delivery of goods from one point to another. The main tasks of logistics are the maximum reduction of delivery terms, simplification of document circulation and ensuring the safety and security of cargo. However, it is not yet possible to solve the above-listed problems quickly and practically.

Maersk Line
Maersk Line
Despite the availability of modern Internet technologies, the problem of finding cars and goods for both sides remains urgent - and this is actively used by mediators. However, the chain of "extra" people significantly increases the cost of transportation itself. In addition, lack of opportunities for the cargo owner to somehow control the delivery process nourishes "gray" schemes, smuggling and counterfeiting in the market.

The process of delivery of goods is complicated by a multitude of interactions between logisticians, forwarders and officials. Sometimes even a slight deviation from the planned schedule can lead to the rupture of the entire chain. In addition, the situation is complicated by the paper red tape and customs issues related to the declaration of goods and permits.

This problem can be solved by implementation of a blockchain system, which will radically change the entire workflow in the sphere of cargo transportation. The main qualities of blockchain - transparency, security and absence of a third-party regulator - can become indispensable for logistics. This technology is actually capable to solve many problems. Here are just a few of its advantages:

Reduction of workflow: all information and work records will be available to the transaction’s participants. In this case, the data cannot be faked or changed;

Security and full control of the delivery process: the blockchain technology records the entire chain of transport from point A to point B, preventing any possibility of deception.

Savings on the mailing of documents;

Reducing the cost of transportation by eliminating numerous intermediaries;

Optimization of the workflow. All unnecessary operations that complicate the work of logisticians, officials and managers will be automatically excluded from the chain.

The great opportunities offered by the technology, could not go unnoticed either by states or by the largest companies. Experiments on its implementation began in late 2016: members of R3 Wells Fargo and the Commonwealth Bank of Australia for the first time successfully used blockchain and smart contracts to ship cotton from the US to China. However, the experiment was not further implemented in the supply chain.

The Netherlands and the largest Danish carrier Maersk Technology have also tested the technology. In addition, the blockchain logistics is considered by such giant retailers as Wal-Mart, Amazon, Alibaba and Kestrel. Finally, the wave touched start-ups-carriers.

Ukrainian online platform A2B Direct became the first logistics company in the CIS, which implemented blockchain in logistics operations. According to the project's creators, adjusted Ethereum smart contracts will solve the issue of tracking cargo, and will also help introduce a system of incentives for carriers. To date, A2B Direct is delivering cargo through the territory of Ukraine and Belarus, but soon plans to enter the international freight arena.

Such platforms will allow the participants of the freight transportation market to solve some specific problems, particularly:

Eliminate intermediaries;

Manage the process of mutual payments online;

Work with documents accompanying transactions;

Track the location of goods in 24/7 mode;

Quickly find a suitable transport for delivery; 

Find a cargo for the carrier, etc.

Thus, implementation of blockchain solutions in the process of cargo transportation will solve problems with document circulation, security and cargo tracking. But most importantly, the cost of transportation will decrease significantly.

However, despite all the above advantages, it is still too early to draw any serious conclusions - the test period for global innovations in this area is still ongoing.