Blockchain Revolution in Logistics
Modern logistics is an extremely complex process. The supply chain for the production of modern high-tech products involves many stages and often passes through many geographical points. Blockchain technology can make a real breakthrough in logistics and supply chain.
The main advantages of blockchain in logistics:
1. Increase in transparency and reliability of the supply chain
Since all the data is reliably stored in the database of the blockchain system and each participant in the supply chain can check the information for each cargo in real time, the probability of a discrepancy in the documentation decreases. This happens, for example, when the carrier and the consignee misinterpret the delivery time. This usually affects the on-time delivery indicator.
2. Reduction in paperwork
90% of the foreign trade turnover is delivered in containers. The are an average of 20-30 links of the logistics chain (including shippers, consignees, carriers, customs, control authorities) in the delivery of each product, between whom there are more than 300 units of information interactions. With the help of the blockchain, each participant of the supply chain can make its record in the block. And this eliminates the need to register a large number of shipping documentation at each stage of the supply chain. Also, for example, if the conditions of the delivery contract have been violated and unauthorized changes to the accounts have been made, the supplier may be fined. Blockchain can solve this problem, since all operations and transactions are fixed in the database of the blockchain, and it is impossible to enter false information or unnoticeably change the existing one.
3. Elimination of intermediaries
There are warehouse providers, international freight forwarders, transport service optimization providers and other intermediaries in the supply chain. Due to their large number, the logistics company spends a lot on commission. Blockchain can eliminate intermediaries and significantly reduce the amount of workflow. In general, blockchain will speed up the process of transactions between cargo owners and charterers, make it safer and cheaper and ensure prompt receipt of reliable information. Also, by eliminating intermediaries, the company can save money. Now, the commission for mediation in the transportation averages between 15% and 45% of the total transportation price. The use of blockchain and smart contracts will ensure transparency in the logistics market. This will lead to decrease in prices due to transparent and open interaction of all participants in the supply chain. Also, the need for intermediaries will decrease and logistics companies will be able to save considerably on the services of various brokers. Blockchain will reduce the amount of time as well as financial and human resources involved in the transportation process.
4. Saving on the workflow
The process of delivery is associated with paperwork and various documentation and declaration of goods. Blockchain is able to reduce the time on document management. Since all information is recorded in the blocks, the blockchain enables us to quickly find the link of the carriage where the mistake was made. This will greatly reduce the company's losses. Records of each of the links in the supply chain can be maintained, for example, using a smartphone, which will significantly reduce the need to manage a large number of accompanying documents at each stage of the delivery. Talking about the companies, we can conclude that the company Sinochem significantly saved using the blockain technology Sisal. Using digital bills of lading and smart contracts, the company increased the efficiency of transportation of crude oil and reduced financial costs by 20-30%. The company Olam also offers significant savings on the implementation of the blockchain. The processing of documents on the Olam blockchain costs about $10 for one shipment, while the custom processing of documents for one shipment costs $93. The cost of sending documents on the Olam blockchain is free of charge, while the usual transfer of documents costs about $20 for one shipment.