Immutability, transparency and the elimination of intermediaries are some of the most cherished attributes of the blockchain upon which a lot of disruption is happening across various industries. Being able to keep track of processes, goods and services across extended chains of communication is a development that has become very essential to the social and commercial aspects of human existence. As international trade and logistics continues to expand, more efficient methods are being developed to enable effective service delivery and value transfer, however certain limitations still exist, making it necessary for blockchain implementation which would enable the application of its inherent properties.
Getting rid of human interference
CEO of Netcoins, Michael Vogel, said that the main limitation of any logistical system is the human component. According to Vogel, whether it is data entry, auditing, errors due to typos or miscalculations, all processes which involve a human touchpoint introduce possibility for delays or errors. In fact this is why VISA Europe is exploring the idea of using Bitcoin and blockchain technology behind-the-scenes to improve internal fund settlements (to improve response time and accuracy).
“Blockchain is the perfect tool for logistics because it takes the traditional database to the next level, an immutable record which is ideal for audit-keeping and immune to tampering”, says Vogel.
He also notes considering accounting as part of logistics, the dawn of blockchain has created an opportunity for the concept of “triple-ledger” accounting, an idea in which a third accounting ledger based in a blockchain is kept along with all financial records. This allows for instant auditing, as opposed to the traditional practice of quarterly reviews.
“As soon as Blockchain networks begin taking their first steps on a mass-market level, they will save the international trade industry at least $50 billion USD per year. And upon maturity, Blockchain technology could save the logistics industry a whopping $500 billion USD per year in mundane expenses, along with other benefits that come along the way”, says John Monarch CEO at ShipChain.
A higher level of security
Monarch explains that connected devices revolving around the Internet of Everything (IoE) need a higher level of security. Monarch notes that Blockchain technology is a matchless solution in this regard because it provides the best protection through distributed ledgers, advanced encryption, smart-contracts and reduced intermediaries. As a result, this will tackle corruption, ransomware, theft, premium-fees and tracking issues.
As at the time of writing, the logistics sector employs the most people in the world, and as this sector expanded over millennia, it has required innovation to scale and sustain practicality for the growing human population. This is happening again at the time of writing, with the fourth industrial revolution.
According to Jeremy Epstein, CEO of Never Stop Marketing, one of the biggest challenges in supply chains is redundant systems that don’t talk with each other. This he says adds a huge amount of friction and cost in terms of the supply chain. Epstein notes that different organizations, be it governments or vendors, spend a lot of time verifying that shipments contain the items they are supposed to. When all is said and done, this adds cost to the customer.