How blockchain can benefit logistics industry

Blockchain is fast becoming a major boost for the logistic industry around the world

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How blockchain can benefit logistics industry

According to IBM estimates, the implementation of blockchain could save the logistics industry $38 billion. The estimates follows  a test case carried out by IBM and Maersk using a batch of avocados shipped from Mombasa to Rotterdam.

The calculated costs of the shipping container itself is more than $2,000. The cost of associated paperwork comes to $300–15% — 20% of total costs.

These costs can be reduced to zero by distributed ledger technology. The final savings for the industry are calculated with due regard to the fact that annual global traffic is about 70 million containers.

The information in a block cannot be altered retrospectively as each block contains a timestamp and a link to the earlier block.

How block chain technology can benefit logistics

• Transparency for customers
Many people know a little information about the product they use. With block chain technology, customers will be able to see every part of the journey the products took before arriving.

• Transparency for auditors
Since the history of the deal is locked into each block, auditors will have an easier time understanding where items and resources have gone and help chain leadership to make the supply more resourceful and productive.

 Greater security
The technology will enable the companies to identify attempted fraud in the supply chain. The two- year project undertaken by Port of Rotterdam will give insight into the capacity of the advantage.

Blockchain technology will naturally develop into a symbiotic relationship with the Internet of Things and today’s highly developed logistics and supply chain management systems.

Regulation

The emergence of crypto assets, such as cryptocurrencies, is seen by many as part of a broader trend toward more diverse financial market infrastructures that both enhance choice and offer new ways to meet current and future payment needs.

Thus the importance of blockchain regulation cannot be overemphasized.

    Visual representation of blockchain

© iStock by Getty Images – 1153383523 phive2015

The European Union for example strongly supports a EU-wide rules for blockchain to avoid legal and regulatory fragmentation. The Commission adopted a comprehensive package of legislative proposals for the regulation of crypto-assets in order to increase investments and ensure consumer and investor protection.

This package updates certain financial market rules for crypto-assets, and creates a legal framework for regulatory sandboxes of financial supervisors in the EU for using blockchains in the trading and post-trading of securities.

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