Of the many benefits blockchain technology is supposed to deliver to trucking – faster freight payments, more contract transparency, and fewer “middlemen” in the transport process – improved security is perhaps one of the biggest, according to Craig Fuller, CEO of futures and financial market data provider TransRisk.
“Cargo security is one fantastic application for blockchain; it could help prevent identity theft and ‘fictitious pickups’ when it comes to cargo theft,” he explained during a conference call organized by Stifel Capital Markets.
Improving food safety – especially in terms of tracing outbreaks of food-borne illnesses – is another huge potential benefit of blockchain, Fuller added.
“Blockchain creates a ‘bread-crumb record’ of everyone who touched the [food] freight from farm to table: which farm, the specific field it came from, the specific truck, the distribution center, and what store it got delivered to,” he noted.
“If you think about the food-borne illnesses that happen, they are expensive for shippers; they must forensically go back to find the ‘bad source’ but in the meantime, all of their food pulled is pulled from grocery markets nationwide,” Fuller said.
With blockhain, the “chain of custody” it creates with shipment data allows for more precise identification of the trail tainted foodstuffs followed, he pointed out.
The reason blockchain supposedly can offer such “bread-crumb” traceability is that it is a decentralized and distributed digital ledger that records transactions across many computers for each specific shipment, Fuller said – recording them in such a way that the record cannot be altered retroactively without the alteration of all subsequent blocks and the collusion of the network as a whole.
As a result, a unique “cryptographic code” is calculated for each block of transactions, with that code then added to the following block, thus creating a “unique chain” of blocks containing all the transactions for a shipment from origin to destination, he said.
Getting to the point where blockchain technology can provide such benefits, though, will take time – about three to five years in Fuller’s estimation.
For starters, he noted that several key “hurdles” need to be overcome to make blockchain a functioning reality:
- Transaction processing time: Right now, public blockchains are currently limited to handling from three to 20 transactions per second; by contrast, Visa is capable of handling some 56,000 credit card transactions per second.
- Data protocols: Blockchain needs a set of standardized and mutually agreed up set of software protocols to make such digital ledgers work between all the parties involved in a freight transaction. That includes encryption protocols to protect the data.
To spur the creation of such blockchain protocols, Fuller helped found the Blockchain in Trucking Alliance (BiTA), which is now being headed up by Chris Burruss, former president of the Truckload Carriers Association (TCA).
“Our goal is to develop market standards,” Burrus explained on the call with reporters. “What we are doing is bringing together all the elements across the supply chain [and] harnessing them all together – shippers, brokers, truckers, and telematics providers – all in same place. It is very important that everyone is not doing their ‘own thing.’ We need a common thread in the [blockchain software] coding and in the [blockchain] terms themselves.”
TransRisk’s Fuller believes the initial application for blockchain in trucking will be in the area of “smart contracts,” which is a computer code executed under predetermined conditions that is intended to facilitate, verify, or enforce the negotiation or performance of a contract.
“The beauty of smart contracts is that they automatically execute; a shipper would know when the truck picked up and delivered the load and if there are no claims for damages or disputes, it would enable a direct pay out,” he said.
Smart contracts would be particularly useful in detention fee enforcement, Fuller noted.
“That’s the most obvious use case for while large carriers have the resources and leverage to collect [detention fees] smaller ones do not. A lot of dispute takes place,” he explained.
“So in the case of a smart contract you’d have an ELD [electronic logging device] recognize when a truck arrives and departs, you’d log that information in, and pay detention accordingly if needed,” Fuller said.