BIRMINGHAM, AL. Blockchain is one the biggest buzzwords in trucking these days. Its benefits to the industry are still something of an unknown, but transportation companies’ fear of missing out on blockchain could be what pushes it to become the norm in the coming years — even if many still don’t understand it.
“I’m still trying to figure it out myself,” Tom McLeod, the CEO and president of McLeod Software, said with a laugh during a session with the media, held at the Alabama Sports Hall of Fame during the 2018 McLeod Software User Conference.
Taking a more serious tone, McLeod said: “To simplify it, blockchain will allow the visibility of information more readily when multiple parties are involved. Right now there’s too many ways for that information to be inaccurate, to be modified. Blockchain gives us a mechanism for ensuring that information is secure — even though it’s visible across the network where you’ve got multiple parties adding to the information.”
A little over a year ago, McLeod Software and TransRisk cofounded the Blockchain in Transport Alliance (BiTA) with one goal in mind: to help the transportation industry work toward a set of standards that will make it easier and more affordable for carriers and brokers to implement blockchain technology in shipper supply chains.
Without standards, the adoption of blockchain technology could lead to diverse integration requirements that would impose a huge cost and overhead burden on the supply chain without necessarily adding a lot of value.
“We expected the initial (BiTA) applications to revolve around pharmaceuticals, tracking and delivery, and food supply,” McLeod said. In just a year, BiTA has received nearly 3,000 applications to join the alliance.
Walmart is working with IBM to use blockchain as a food safety solution. The retail giant announced last month that will be requiring all its suppliers of leafy green vegetables for Sam’s Club and Walmart to upload data to the blockchain by late 2019.
This move would help the company during in case of a contamination breakout — such as last spring’s E. coli romaine lettuce problem. With the supply chain recorded as part of the blockchain, it would make a breakout more easily traceable.
“An incident where they have E. coli in leafy green vegetables — and they can’t tell quickly where it came from — they have to pull all the leafy green vegetables” in their supply, McLeod said. “And then people wouldn’t buy romaine lettuce anywhere when it was really only one supplier, one location, and really only a few pallets that were affected.”
The money saved by not having to pull the company’s entire supply of lettuce would have paid for the blockchain implementation, McLeod noted. “So we expect there to be a good return on investment,” he said. “We wanted it to be done in a way that doesn’t unnecessarily complicate life for the suppliers — as well as the carriers having to conform to everybody’s” individual standards.
McLeod said that BiTA has had a phenomenal first year. The alliance went from seven charter members to more than 470 current members and has 2,800 applicants. It is now the largest blockchain consortium in the world. The diverse membership of BiTA bodes well for its ability to address all aspects of this standards opportunity.
Some 98% of the supply chain is currently represented by BiTA membership:
- 35% of the members are asset-based carriers (truck, rail, air, ocean, intermodal);
- 30% are non-asset based logistics and 3PL companies;
- 20% are technology providers, including other TMS providers, telematics providers, and other technology products;
- 5% are shippers;
- 10% are in other categories, including banks, law firms, CPA’s or consultants, and other service providers.
BiTA is well down the road on organizing and performing the important work with its standards committees: Data Formats, Interoperability, Finance, & Technical Compliance.
The Data Formats technology committee has formed two working groups: Location Component and Tracking Document Working Groups. The first is looking at location data to determine what data points need to be included in a standard specification. The second will explore documents such as bill of landing (BOL) and proof of devotion (POD) in order to identify the key data points needed for a standard specification.
There are also five BiTA study groups, which the alliance calls think tanks, that are investigating other areas of interest to BiTA members. Those think tanks are Risk Management, Operations & Asset Utilization, Driver Marketplace, Supply Chain, and Finance & Business Administration.
A goal of BiTA and blockchain is to have a purpose beyond just being a buzzword that the trucking industry uses but doesn’t understand.
“Is there something that blockchain is bringing to the technology or the application that just wasn’t there?” asks Ken Craig, McLeod vice president of special projects and a member of the BiTA Board of Directors. “That’s really what has to be looked at.”
“You have a lot of people out there saying blockchain is the answer to everything… I speak to a lot of these trucking associations and people still don’t understand fundamentally what it is,” Craig said. “So you got people pushing the technology. The hype meter is still going off the scale.”
Bitcoin and the idea of getting in early on the next big thing plays a role.
“What it’s created is this FOMO effect — the fear of missing out,” Craig said on Monday. “Oh if I bought Bitcoin when it was at a dollar last October, I’d be a millionaire now. With blockchain, most of the hype that’s coming into it is from the cryptocurrency of the financial world.”
Craig said it’s “insane” that BiTA has received 2,800 applications over the past year. “Why do you have 2,800 applications? It’s the FOMO effect: ‘If we don’t get on this now, we’re going to lose out’,” he said, referring to the frame of mind of many in transportation who want to involved in blockchain.
“But the good news is: We’ve got over 2,800 applications. Because now, to me, that gives BiTA a really good chance of being successful because we’ve got over 98% of the supply chain represented. So when we do develop standards, who are they going to roll out to?”
He said that FOMO effect is leading to the potential success of BiTA and helping blockchain become a part of trucking. Also helping blockchain take hold is how the big players — Walmart, UPS, FedEd, etc. — adopt blockchain.
“It will be those guys who have the deep pockets, who can afford to really invest in these first implementations,” Craig said. “Someone described it like taking the space shuttle to go grocery shopping. You have to have a big footprint to get into blockchain right now.”
Over the next couple of years, Craig expects to see a few big transportation players take the lead in blockchain. “Over the next two to five years, you’ll see this start to roll out to more and more companies as it becomes more popular and more understood.”
So seeing Walmart use blockchain to track leafy green vegetables is great news for BiTA, Craig said. “These standards will not be of any use if they don’t involve the big suppliers. So with Walmart coming out with this, maybe now we can move the standards forward much more quickly now that they’re coming on board.”
“So to me, it’s good new for BiTA. It’s good news for the industry,” Craig said. “The real challenge to BiTA is how do we get the standards in place that affect most of the big carriers. What about Amazon? What about the other players?”