It’s no mystery how freight gets moved from point A to B every day. It takes a shipper, a carrier, and often times several intermediaries in between. But what about a future where those intermediaries – or middlemen – might become irrelevant and disappear?
Enter blockchain technology.
Blockchain is a type of distributed, decentralized ledger database used to record digital transactions that are shared in a technologically secure way. According to a blog by Blockgeeks, blockchain technology is like the internet in that it stores blocks of information across its network. It allows digital information to be distributed, but not copied. It was originally designed for Bitcoin, a digital currency that was invented in 2008.
In trucking, blockchain technology is said to expedite and better secure freight movement transactions for shippers and carriers. According to Sandeep Kar, chief strategy officer at Fleet Complete, numerous groups are actively considering this technology.
“That’s because various aspects of trucking could be impacted by blockchains,” Kar explained during TU-Automotive’s most recent Connected Fleets Conference in Atlanta.
Fleet Complete recently joined the newly created Blockchain in Trucking Alliance (BiTA), which is leading a global initiative to bring blockchain into the trucking industry to enhance the efficiency of freight movement.
From a fleet perspective, Kar noted, blockchain technology will ensure better asset utilization and help the industry as a whole more accurately forecast and predict volumes. He added it will also enable better driver monitoring and whether the vehicle was operating under the right regulatory framework.
After the entire freight transaction is finished, the blockchain would provide an audit of the process to show fleets how they could have done better, Kar added.
“These are some of the benefits of the blockchain system,” he explained. “These are the kind of benefits that we wanted to drive to our customers.”
According to Kar, other benefits of blockchain include:
- Transparency of price, ownership, and the entire process of the freight movement
- Reduction in the cost of regulation compliance
- Improved traceability and track ability
- Expedited claims settlements
But when it comes to the middlemen who essentially claim a lot of revenues just by being intermediaries, Kar said there is a bit of threat for them. Once blockchain is adopted, it could end up completely eliminating the middlemen and shorten the supply chain, he emphasized.
“We have gotten so used to using our current infrastructures and systems that we’ve kind of become blind to the inefficiencies and the deficiencies of the current system,” Kar explained. “And that’s what blockchain is trying to do. It’s trying to open our eyes to the inefficiencies in the system.”
Some of the ongoing challenges tied blockchain include:
- Not many people know about it
- Concerns about cryptocurrencies and the volatility in these currencies
- Confronting the existing infrastructure and system
“Right now we have trillions of dollars’ worth of monetary movement between parties that act as intermediaries, but you can’t just wake up one day and make them irrelevant,” Kar stressed. “So there is that resistance that is there.”
Craig Fuller, CEO of TransRisk and co-founder of the alliance, announced during the Connected Fleets Conference that BiTA, formed on Sept. 2, has 150 companies that signed up in that first month. He hopes the alliance will develop blockchain standards by and for the trucking industry.
Fuller referred to blockchain as a 'trustless network,' which means trust is not required to prove the validity of transactions.
“The power of blockchain is really about counterparties and working with other parties,” Fuller explained. “The important thing to know about us is that we’re bringing these disparate, sometimes and in many ways competitive, parties together to create a common framework to solve problems.”
Quoting a tweet from Deloitte, Fuller added that 10% of the global gross domestic product will be stored on blockchain by 2025. So if you’re not paying attention to blockchain, you should be, Fuller said, noting “it has the power to transform almost every element of this industry.”
Fuller highlighted some additional opportunities blockchain could lend to trucking. For instance, it could help fleets detect vehicle maintenance and quality assurance elements of trucks and other equipment.
“What’s the vehicle maintenance history and how do I ensure the quality of that truck was maintained?” Fuller asked. “In a blockchain environment you can actually have a trustless record. You actually have the ability to have all the information and everything that happens from that vehicle from the moment it rolled off the assembly line to the moment you get rid of it. All that information is recorded in the blockchain.”
Fuller added that blockchain also has the potential to create an environment similar to an “Airbnb of trailers,” which will be owned by a third-party entity and shared collectively with fleets. The blockchain will allow companies to know who has access to that equipment as well as who to charge for that equipment.
However, Fuller noted the most powerful part of blockchain is eliminating fraud and the bloat.
“Every single day there is $140 billion tied up in disputes for payments,” he explained. “The shippers end up saying, ‘You didn’t send me a proper bill.’ And the shipper sits and doesn’t pay it until that price is exact. It’s a dispute. It ties up cash flow and creates a real strain on the environment.”
So, how far away is the industry from a true implementation of blockchain? Kar said because carriers have a lot on their plates right now and he doesn’t believe they are ready for it yet, it could be another two to five years out. Yet, Fuller emphasized that blockchain will be ubiquitous in commercial applications well before autonomous vehicles.