Another survey seems to show that blockchain is catching on in the logistics sector. According to a recent Hermes survey, a significant portion of German logistics managers think that blockchain could be poised to make big changes happen in their industry.
The survey wasn’t blockchain-specific, but 35% of the respondents recognized the importance of blockchain technology. 33% thought that big data is important for logistics, which is an areas where blockchain excels.
While blockchain isn’t a standalone big data solution, it could be the foundation for a new era in global logistics.
Big data relies on Artificial Intelligence (AI) to sort through piles of data that would be impossible for a human to get a handle on, and blockchain could be the database technology that allows global trade to be recorded on a mass scale.
Blockchain is a Transformative Technology for Logistics
There are a few technologies that are coming into their own at the same time. Half the respondents to the Hermes survey thought that blockchain is becoming increasingly important for the collaboration process, which is where there is a tremendous amount of efficiency waiting to be unlocked.
For hundreds of years, the shipping process has been relatively opaque. Records are often kept on paper, which makes doing research difficult, even within a large logistics company. Blockchain sits at the center of numerous new technologies, all of which could revolutionize the global shipping industry.
For example, let’s say a company wants to finance the purchase of a product that is in another country and have it shipped to them.
Using the current system, this process could take weeks to push through and is fraught with inefficiencies.
Depending on where the buyer is located, who is financing the purchase, and how the goods are being shipped, more than ten different commercial entities could be involved in the transaction. They all have their own systems, and large-scale data collection is nearly impossible from a practical perspective.
How Blockchain Fits In
Now, let’s introduce blockchain and a few other technologies into the equation.
A company could use a blockchain-based trade finance platform to secure a loan for the goods they want to purchase, and the bank that issues the credit could use the same blockchain-platform to deliver payment to the seller.
Instead of waiting for the goods to arrive at the port, an Internet-of-Things (IoT) powered scanner could confirm that the goods had left the shippers warehouses, and approve payment instantly via a smart-contract.
All the information would be contained in one shared blockchain register, and as the goods made their way across the country or planet, IoT sensors could track their movement from checkpoint to checkpoint.
As the goods pass from one shipping company to another, the same sensors would approve payment for their services, without involving any humans whatsoever. Eventually, if all goes well, the goods would arrive at their destination, at which time the buyer would automatically incur the debt from the financing bank, as their goods enter their legal possession.
Clearly, there would need to be provisions for unforeseen circumstances. Overall, a modern system would offer everyone involved benefits that would incentivize a shift towards greater use of technology, and cost saving measures.
The Big Players Get It
It should come as no surprise that some of the world’s largest shipping companies are working on deploying blockchain systems. Many major port operators are also developing blockchain platforms that would track goods as they flow though the port, and greatly simplify tracking and the customs process.
Companies that specialize in trade finance are also into blockchain. Ping-An is already using a blockchain-based platform for domestic trade finance in mainland China. The same platform looks like it is going to be the base of the new global trade finance platform that the Hong Kong Monetary Authority (HKMA) is using in cooperation with some of Asia’s largest banks.