So You're Sold on The Blockchain...Now What?
In the past, we broke down the basics behind blockchain technology and explored why it’s well-suited for the logistics industry. For a more detailed refresher on the blockchain, read here and here.
It’s been almost five months since our blockchain primer series, and it generated a huge response. The concept of blockchain technology in logistics is great, but it’s time to ask: what’s actually happening with the blockchain and freight forwarding?
Here are some concrete examples of what's working, what's not, and where the jury's still out.
Maersk and IBM: The Big One
Maersk and IBM arrived at their partnership by first cataloging problems in the current international logistics process and then formulating a solution that can address those problems. That solution turned out to be the blockchain.
The Maersk-IBM solution targets three pain points: inefficiency in international trade documentation, security threats in the current logistics process, and a lack of visibility in logistics overall. When IBM wrote about this project on their blog, the very first benefit they identified was “fast, secure access to end-to-end supply chain information.” Both Maersk and IBM believe the blockchain will upgrade, streamline, and protect the international freight management chain.
Our Take: If they can pull it off, the Maersk-IBM plan could be revolutionary. But concerns about neutrality still stand. If this is a platform for Maersk’s partners only, users would need to use Maersk’s services exclusively to benefit from it. This would limit their ability to evaluate their options and make objective, rational business decisions.
FedEx and Amazon Embrace Different Blockchain Approaches
FedEx and Amazon are two of the biggest players in freight today. Both companies are testing blockchain solutions that could help steer how the technology is used in logistics. But both have taken different approaches so far.
FedEx is testing the use of blockchain technology to assist with tracking high-value cargo. It’s part of their greater strategy to ward off stiff competition in last-mile logistics.
Meanwhile, Amazon wants to help companies using Amazon Web Services (AWS) easily integrate the blockchain into their offering. AWS users can benefit from the blockchain without having to worry about the complexities behind its development. While not specifically a logistics solution, by making the blockchain readily available to anyone, Amazon could help smaller businesses with logistics services keep up if a blockchain-based supply chain solution becomes the standard.
Our Take: FedEx is developing a blockchain solution that’s specific to its business. If they can deliver transparency and security for the specialized, high-value cargo they handle, there’s no reason they wouldn’t expand to cover their massive volume of shipped goods.
READ MORE: RETAILERS WHO ARE WINNING AT LOGISTICS
Amazon is using a distributive model where any AWS user can use Amazon’s “plug-and-play” blockchain solution for their own company. Those users could include freight forwarders and NVOCC’s.
By taking two different, but not mutually exclusive, approaches to the blockchain, FedEx and Amazon show how companies are still testing varied blockchain strategies, and the outcomes remain to be seen.
Ports Are Embracing Blockchain Technology, Too
Ports often get overlooked in the logistics supply chain. There are several reasons why they matter, and here’s another one: the ports are on the cutting edge of putting the blockchain to practical use.
The Port of Rotterdam is a recent example. Europe’s busiest freight port wants to use the blockchain to better track shipping containers as their volume continues to increase. In Abu Dhabi, port subsidiary Maqta Gateway has already launched a blockchain-based service that will help forwarders track shipments, make secure payments, and generally reduce the dependence on paperwork. Abu Dhabi Ports plans to expand the service to all partners in their logistics community soon.
Our Take: Ports are a logical place for a blockchain solution. They handle tons of documentation and are constantly loading and unloading containers. They’re particularly at risk for fraud and service breakdowns, so the blockchain seems like a perfect fit.
The question for ports is how their technology will integrate with the technology that carriers and logistics businesses are developing independently. Regardless, we expect more announcements from the top ports around the world regarding their own blockchain projects.
On the one hand, it may seem frustrating that a technology as revolutionary as the blockchain is developing slowly, with no single solution settled on. But since the blockchain has no centralized authority, independent companies are experimenting with models that suit their needs. In the end, this approach will produce a more robust set of practices that, once validated, can provide more standardized approaches that can be more easily replicated to see if the blockchain will really revolutionize logistics in fact, not just in theory.
By: CoLoadX on Aug. 3, 2018, 2:01 p.m.