The logistics industry and supply chain have been a fundamental matter since the first exchange in history took place. During this time, both sectors have grown a lot: for example, a container shipment has increased by 290% since the beginning of the century. However, a fast rise brought more severe issues. The logistics industry is suffering from constant threats of fraud, counterfeited and stolen goods. Due to the lack of security and tracking possibilities, the loss of shipment costs billions to businesses.
Nonetheless, as the world moves forward, new technologies and digital solutions take place to deter enhanced hazards. Technologies like blockchain, internet of things (IoT), artificial intelligence (AI) are transforming the sector and suggesting innovative solutions to fight the most relentless risks. In this article, we will discuss blockchain and its beneficial features for the logistics industry.
What Are the Problems the Logistics Industry Faces?
As mentioned in the first part, the logistics sector and supply chain are dealing with many perils. Many of them occur from a lack of transparency and protection over goods. For instance, after a long shipment, it’s hard to prove the value and authenticity of shipped items. There are many cases when products are stolen during transportation or replaced to fraudulent ones. Not to mention, the loss in revenue due to lost and damaged items. Also, thefts of expensive goods during a shipment are getting more dangerous every year.
As thieves and counterfeiters begin to use more advanced methods to commit crimes, supply chain and logistics companies are looking at how to counterattack. One of the most promising solutions is blockchain technology.
Blockchain Features to Bring to Your Logistics Operations
Blockchain has a feature of saving immense amounts of data; the system can store smart contracts, too. Smart contracts are profitable for the supply chain and logistics. You may ask why? First of all, although we live in a digital world, many daily logistics operations require tons of paperwork. Involved parties have to sign, prepare, and send documents, and this process takes much time and additional costs. With smart contracts signed on blockchain, all this unnecessary work could be eliminated. Moreover, a digital distributed ledger blockchain has high levels of security and privacy and can ensure safe information flow.
Delivery tracking and authorization
As mentioned in the previous paragraph, blockchain has an extensive database, furthermore, it records actions made on the ledger within a few seconds. If an item is stolen during a shipment, it would immediately notify the system. Also, there could be checkpoints throughout the supply chain, and at each of the stops, items would be scanned and authorized using unique codes. This option would ensure proof of authenticity and reduce the risk of counterfeited or damaged goods.
A supply chain is a relationship between a firm and customer, but logistics operations involve way more than two stakeholders. Products go through manufacturing, packing, shipment, quality checking, selling, and other processes. With that being said, it is vitally important to provide the most accessible platform to share information. Blockchain has this feature and allows easy data flow among involved parties. All authorized institutions could put their input regarding goods and check their further journey. That would ensure that each point knows conditions of items, and can track possible acts of damage or theft.
Additional payment options
The logistics sector is a global matter, and despite that, country borders don’t mean that much, different currency can cause some disadvantage. Logistics operations involve huge costs, and their profitability can be easily affected by a bad exchange rate. Blockchain offers a solution – cryptocurrency. This additional payment method is not attached to any country or fiat currency; thus exchange is not regulated by a government or bank. Without a central point of authority, logistics companies could save millions as they wouldn’t have to pay any fees or adjust to bad money exchange rates.
Logistics operations affect many areas in our life: an efficiently working supply chain provide all necessities we use. Without a reliable system, many of us could lose valuable goods and money. Hence, we need to work to find the most suitable solutions. The lack of transparency, traceability, and security are imperiling a supply chain. Nevertheless, companies are empowering technologies like blockchain to fight all these issues. Blockchain is a practical solution to determine counterfeit, theft, damage issues in the logistics industry.