Blockchain as a Saviour for Handling Transport Industry Challenges

4 Major Problems with in Transport Industry

❖    Transportation Payment and Dispute Resolution:

A recent research has stated that every day a whooping $140 Billion got stuck in the disputes for payments related to transport industry.

It is estimated that on an average, for an invoice to get paid a company should wait for about 42 days, before it receives the payment. This amount can be better utilized for business advancements, better delivery times, better service to end users.

❖    Administrative Costs:

Over reliance on paper transactions have been forcing the transport industry’s administration costs to rise as high as 20% of overall transportation costs.

A recent experiment by IBM has revealed that a simple refrigerated shipment needs to travel through more than 30 different organizations and required over 200 separate communications. Any lost form or delayed approval could hold up the container in port indefinitely, or get it lost altogether.

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❖    LTL Inefficiency:

Almost 90% of the companies have less than 6 trucks or fewer, this creates huge gap between shippers (the demand) with carriers (the supply).

Low Truck Load popularly known as LTL is impacting almost 29 Billion miles every year, where truckers were forced to travel with partial or empty truckloads. This is costing trucking companies millions of dollars every year, also indirectly raising the shipping costs for consumers.

❖    Transportation of Temperature Controlled Goods:

Temperature deviations nearly affect 8.5 % of sensitive pharma shipments, this number is as high as 15-20% in Middle East.

These temperature deviations make the custom clearance a dream for bio-pharma products, resulting in wasted transportation costs, additional administrative inefficiency, and in most cases, a loss of the product itself.

How Blockchain can be the saviour here?

❖    Better Freight Tracking:

With increased demands for same day & on demand delivery, logistic companies were forced to innovate for meeting customer demands.

Most of the companies have already invested in really good tracking technologies, however the scaling this technology to more difficult user demands is proving difficult—particularly when it comes to authentication.

Also, the current systems for providing and recording this data have a great chance of subjecting to misinterpretation or manipulation, which can have dire consequences on the global supply chain.

This problem can be tackled by deploying blockchain for data authentication, where the entire network can contribute and validate data, and it is no longer subject to tampering.

This increase in tracking info reliability will also help in the conservation of goods being shipped especially the temperature sensitive ones like Pharma Products.

❖    Blockchain + IoT = Efficiency:

Blockchain combined with the efficiency of IoT can help in capacity monitoring.

It’s the Cargo Volume that defines the shipping freight’s cost. By deploying IoT sensors in trucks & shipping vehicles, shippers and transportation companies can detect the amount of space taken up in a shipment and determine cost accordingly, transmitting all of this information to the blockchain.

A Classic example of this implementation is made by Swiss firm SkyCell which created air freight containers refrigerated bio-pharmaceuticals that monitor temperature, humidity and location.

This helped SkyCell to bring their temperature-deviation rate down to less than 0.1%. SkyCell also uses its cloud platform to record all documentation throughout the process on a blockchain ledger, such as bills of lading and customs forms.

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❖    Effective Freight Tracking:

The Scope of tracking is not just confined to the delivery performance; it can also be applied to performance of individual vehicles within a fleet.

Blockchain can help businesses in purchase decisions of second hand delivery vehicles, by authenticate information on the past performance of the vehicle and its maintenance history.

The blockchain can store and validate all of this information for buyers and sellers without the need for a middleman.

❖    Carrier Onboarding made simpler:

Blockchain can also help in validating the driver records of a new carrier.

Blockchain makes driver record validation simpler by creating a decentralized network that holds all the necessary records of carriers across the transportation and freight industry. This information would be nearly impossible to falsify and almost immediate to verify.

❖    Vehicle to Vehicle (V2V) Communication with IoT support:

Vehicle to Vehicle Communications essentially allow for multiple freight vehicles to form a platoon and communicate, improving fuel efficiency and safety.

This data created by the use of V2V communications on the blockchain can help transportation companies across the world streamline their operations.

❖    Reliable Load Boards:

By Employing blockchain, shippers can post timestamped loads that are recorded and verified by the decentralized network. This ensures that a particular load cannot be duplicated and the data will maintain its integrity.

This also eliminates the need for a middleman in the form of a broker, because the blockchain can authenticate load data, prevent duplication, and make it visible to load boards.

❖    Eliminate Middleman and Make Profits:

According to Blockchain Experts, supply chains nowadays are extremely inefficient because they rely on paper-based systems, paper-based forms have to pass through numerous channels of approval, increasing exposure to loss and fraud.

Smart Contracts are essentially self-executing tasks that are coded through the blockchain and executed when a certain condition is met.

By using blockchain, smart contracts could completely eliminate the need for all of these administrative steps, cutting costs and virtually removing all possibilities for error. Smart Contracts can reduce the administrative costs by 20%   which is considered to be a huge number in the supply chain.

❖    Increase Liquidity in Supply Chain:

By deploying blockchain based solutions for settlement companies the unnecessary 40 Days’ time period for settlement can be avoided.

Blockchain usage “can reduce borrowing costs by 75% and increase liquidity by 25%.” It’s also possible that “all parties in a supply chain can make 2% to 4% more profit.”

At MDx Blocks our experts with 20+ IT Industry and Technology experience can understand your End to End processes and can help you in identifying core area where Blockchain can fit into. Our services are not only limited to Integration, Consulting, Training, Advisory, POC and more.

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