Shippers have traditionally turned to third-party logistics providers (3PL) to augment their logistics strategies. However, recent developments in the supply chain and globalization of the supply chain have triggered a surge of value-added services. Instead of merely providing logistics management and expansion of available capacity, today’s 3PL offers a whole host of additional services, including freight invoice auditing, claims management, warehousing and more. The role of the 3PL and successful supply chain management is expanding, and as a result, demand for the latest technology by 3PLs has risen. Consider these top five reasons why more third-party logistics providers (3PLs) will look for blockchain technology partners that have already put in the work to create a successful blockchain for trucking platform.
1. In-House Development Is Expensive and Limits Use of the System
The first issue with a 3PL developing an in-house blockchain-based solution goes back to cost. It takes time and money to develop an in-house solution, but that is not the whole scope of the problem. Developing an in-house platform means it is a private platform, operable and usable only to companies or shippers partnering with that specific 3PL. Although this will increase accountability and offer the benefits of blockchain for the unique 3PL, it will face severe limitations.
The typical international shipment incurs more than 200 touch points and transactions between manufacturing and final delivery. Achieving the real benefits of blockchain would require all parties to have access and use the same system. Even if the in-house program is developed with an open architecture to integrate with other systems, it will likely see intense competition from major carriers and companies that have developed blockchain-based solutions.
2. Blockchain Ensures Incorruptible Recordkeeping
Another factor to consider when reviewing why more 3PLs are turning to blockchain technology lies in its ability to enhance recordkeeping. Consider the top value-added services, such as freight auditing, claims management, overarching transportation management, and payment processing. These value-added services will require enhanced record-keeping capabilities, so blockchain will be the natural solution to ensure accurate and thorough records. As per Jon-Amerin Vorabutra via Supply Chain 24/7, blockchain may be used to track these key activities:
- Recording of transfer of assets.
- Tracking purchase orders.
- Linking physical goods to virtual data.
- Sharing information throughout the supply chain.
- Assigning or verifying physical properties, or condition, of products.
3. Blockchain Removes Unnecessary Intermediaries, Streamlining Productivity for 3PLs
One of the problems leading to the outsourcing of activities to a 3PL derives from the complexity of global supply chains. As noted by Adam Robinson of Cerasis, intermediaries may include freight brokers, other 3PLs, shippers, carriers, and B2B resellers. The list is endless. Unfortunately, more intermediaries in the process will lead to increased costs. By removing the unnecessary intermediaries, 3PLs can augment profit margins and improve the efficiency of their services.
4. Blockchain Enhances Compliance Among Users
Since 3PLs are directly involved in supply chain functions, they are subject to the same, if not higher, compliance requirements for their systems and operations. Depending on the type of supply chain, such as pharmaceutical supply chains, compliance can mean the difference between life and death for end users. Therefore, 3PLs will turn to blockchain to ensure compliance with regulations, but blockchain will have additional use cases for managing interactions and contractual obligations.
For example, the Logistics Bureau explains how blockchain could apply to enforce smart contracts. A smart contract leverages data from within a blockchain-based system to trigger an event, such as delivery, automated notification, payment, or assessment of penalties or sanctions.
5. Blockchain Is a Prerequisite for Future Business Models, Technologies and Services
With more businesses moving toward a blockchain-based future, such as Apple, Microsoft, and major carriers, blockchain technology is rapidly becoming a standard for optimization and logistics management. It will have wide-reaching effects on payment processing, and it will become the new name for visibility and traceability within supply chains, especially as new services, systems, and capabilities come online. 3PLs are getting ahead of the curve by working with blockchain technology partners to ensure their services are future-ready for the next wave of blockchain-based technologies.
Secure Your Supply Chain’s Future by Working With Blockchain Technology Partners (like ShipChain) Now
Blockchain technology partners are the latest necessity for 3PLs looking to stay relevant, maintain profitability and offer better services to their clients. With more 3PLs turning to the blockchain, its benefits will become more prevalent and recognizable, and understanding this fact will be critical for shippers, carriers, and third-parties working to bring harmony to today’s around-the-clock supply chain functions. Connect with ShipChain online now to make sure you can take advantage of the latest blockchain-based technologies in your supply chain when they are released.