Blockchain in logistics and transportation: Transformation ahead
“The analog [to the performance history use case] in the consumer car industry is Carfax,” Fuller said. “Except [with blockchain], there’s no reporting agency. [The records] are distributed [across the nodes in the blockchain system built for this purpose].” All records pertaining to the truck would be recorded to the blockchain, from the moment it rolled off the assembly line until it entered the market as a used vehicle — using IoT sensor data as well as other transactional data related to the vehicle. A potential buyer of the truck therefore would be able to make a purchase decision with full knowledge of the vehicle’s history.
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Capacity monitoring. Another potential use of blockchain in the trucking industry is capacity monitoring. One of the factors determining the cost of shipping freight relates to cargo volume. IoT sensors can be used to detect the amount of space a particular party uses; that info is used in determining cost associated with shipment. In the future, pouring that data into a blockchain-based system, enabled by a smart contract, will mean self-executing payments against the amount of space used by the freight, as measured by the IoT sensors. In other words, a much more efficient process than what exists today.
Gray trailers. Blockchain also could level the playing field between truck owners and third-party logistics companies when it comes to “gray trailer pools.” Today, Fuller said, truck owners have an advantage over third-party logistics companies because they own access to freight trailers. Blockchain could enable a business model whereby “the trailers will be owned by a third-party entity and shared collectively with fleets. … You can have a fleet of gray trailers and use blockchain to not only know who had access to that equipment but also charge for it. And you can tie a contract to it and settle it in real time so there is no collection process,” Fuller said.
Dispute resolution. Blockchain will also have a role resolving disputes, he said. “Every single day, there’s $140 billion tied up in disputes for payment,” Fuller said. “The shipper says, ‘You didn’t send me a proper bill. … Your rate is $1.90, but [the bill] says $1.89.” And guess what? The shipper … doesn’t pay it until that price is exact.” Such wrangling creates a strain on the trucking payments environment, he said. With a blockchain system and a smart contract, the transaction would be handled according to the smart contract terms and the contract would be executed and the transaction cleared at the same time, eliminating the current back and forth between parties as they hash out the finer points of their agreement. “In a blockchain environment, you have a transaction standardized and anonymized, and [it’s subject to] what we call smart arbitration,” in which disputes or controversy related to the contract are settled immediately according to the blockchain system’s arbitration rules. And because the facts of the transaction are viewable by all parties, fewer disputes are likely to occur.