Logistics on the Blockchain? It’s happening.

The notion that the likely impact of blockchain is not yet fully understood may be the single greatest understatement ever, at least regarding the potential intersection of business and technology. But while it is fair to say that the impact being delivered for logistics today is certainly not yet matching the hype, it also seems true that the time to consider the range of possibilities for exploring this disruptive, and potentially game-changing technology is now clearly upon us.

So how and where to begin?

In November of last year, Deloitte commissioned a survey of 308 US-based senior executives on the topic of blockchain technology, with each executive representing a company generating $500 million or more in annual revenues. Some of the more interesting findings included:

• Nearly 40% of respondents indicated they had little to no knowledge of blockchain technology
• 55% stated they would be at a competitive disadvantage if they failed to adopt the technology
• More than 25% viewed blockchain as a critical, top-five priority
• Roughly 33% viewed the technology as over-hyped
• 28% reported their companies had already invested $5 million or more in the technology
• An additional 25% expected to spend $5 million or more in the 2017 calendar year

Executives in the consumer products and manufacturing; and technology, telecommunications and media sectors planned to spend the most in 2017.

Based on the clear diversity of the responses, David Schatsky, managing director with Deloitte LLP said, “It is fair to say that industry is still confused to a degree about the potential for blockchain.” Schatsky added, “This diversity may be a testament to the versatility of the technology. But it is likely also a reflection of the fact that, despite the hype, the impact that blockchain will likely have on businesses in various industries is not yet fully understood.”

Blockchain & Logistics: Implications coming down.

While the historical roots and application of blockchain technology have been principally focused on the financial sector, there’s also a highly compelling argument to be made regarding the potential benefits to the $8.6 trillion global logistics market. The inherent multi-party, network-based nature of logistics alone makes it a totally viable and highly attractive candidate. But there is also considerable public information available documenting numerous examples of projects already being undertaken in the logistics industry; by shipping ports, logistics providers, and global shippers alike:

1. The Port of Rotterdam, Europe’s largest shipping port, is taking part in a Blockchain consortium which is focusing on logistics. The project has the support of more than fifteen public and private sector companies based in the Netherlands. Consortium members will spend the next two years designing and developing applications for blockchain technology in the logistics sector. There have been similar efforts in the past, but according to the founders, this blockchain project is unique because of its scale in the logistics chain.
2. Belgium-based Port of Antwerp, the second largest port in Europe by container capacity, is running a pilot blockchain project focused on logistics automation. They announced they are looking to use the technology to automate and streamline the terminal’s container logistics operations. The test is being conducted in conjunction with a blockchain startup called T-Mining. The goal is to speed up the interactions between port customers to prevent the malicious manipulation of data.
3. Shipping and logistics giant Maersk, along with IBM, have announced they are working together “to use blockchain technology to help transform the global, cross-border supply chain.” The blockchain solution based on the Hyperledger Fabric and built by IBM and Maersk, the global leader in transport and logistics, will be made available to the shipping and logistics industry. The solution will help manage and track the paper trail of tens of millions of shipping containers across the world by digitizing the supply chain process from end-to-end to enhance transparency and the highly secure sharing of information among trading partners. When adopted at scale, the solution has the potential to save the industry billions of dollars.
4. U.S. retail giant Walmart has started a major test of blockchain technology for supply chain management. A pilot project, scheduled to start in the first quarter of 2017 and run for four months, plans to leverage distributed ledger technology to track and trace pork in China and produce in the U.S. — two high-volume product categories with large markets. The project — a collaboration between Walmart, IBM and Tsinghua University in Beijing — was first unveiled in October, when the project partners claimed they were creating a new model for food traceability, supply chain transparency and auditability. “By harnessing the power of blockchain technology designed to generate transparency and efficiency in supply chain record keeping, this work aims to help enhance the safety of food on the tables of Chinese consumers,” noted an IBM press release.

There is also ample research available documenting the many expected benefits of blockchain technology, both generally, and within the logistics/supply chain industry specifically, well beyond just the examples cited above. The potential benefits documented within these studies are numerous and varied.

What is the value of blockchain to logistics?

At Sweetbridge, for practical purposes in talking to the logistics community we categorize the value delivered to the industry into one of the following five areas:

1. Improved Compliance, Accuracy & Transparency
   Immutable Shared Contracts, Documents & Transactions
2. Greater Consumer Security & Trust
   Improved Product Visibility, Provenance & Fraud Detection
3. Real-Time Feedback & Response
   Shared & Scalable Data Network Built on Trust
4. Shared Assets, Infrastructure & Talent
   Improved Utilization via a Sharing Economy
5. Improved Financial Liquidity & Capital Performance
   Ease of Exchange and Collateralization

Each of these areas alone could have the potential to deliver clear business benefits that would likely be worthy of pursuing on their own, and arguably, most companies would have little trouble developing a logical argument and use case in support of one or more of these business improvement opportunities. As Adam Robinson of Cerasis states, “With a world that is becoming more connected on a daily basis, blockchain technology will inherently develop into a symbiotic relationship with the Internet of Things and today’s advanced logistics and supply chain management systems.”

The single biggest challenge today may be determining where to start. But as is true of all journeys, they can only begin by choosing to take the first step.

Sweetbridge is a blockchain-based economic framework that transforms supply chain and logistics collaboration through a fast, fair and flexible value exchange that unleashes working capital for the benefit of all participants.