The inception of blockchain technology for use in logistics and supply chain management represents one of the most significant innovations in the industry. Blockchain is a technology that stores incorruptible blocks of information; in logistics and supply chain management, it has the potential to eliminate inaccuracies and hold all supply chain entities accountable. In the age of global transaction processing, blockchain is the undisputed leader in traceability and visibility, and as per FleetOwner magazine, shippers need to think about how blockchain and trucking can interact to move product faster, reduce costs, and create other huge benefits.
Problems With Traditional Trucking Practices
Traditional trucking practices involve many manual processes, ranging from paperwork filing to manually logging miles and hours driven. The passage of the electronic logging device (ELD) mandate changed standards by adding a level of visibility and accountability. Additionally, with the passage of the MAP-21 Act (Moving Ahead for Progress in the 21st Century Act), there were changes made in the hours of service guidelines that reduced the number of hours that could be driven by a trucker before he or she had to rest. When truckers spend less time driving on the road, this yields fewer trucks on the road at any given point. Unfortunately, demand for capacity and more trucks has only grown, and the need for end-to-end visibility is a leading concern for truckers and shippers alike.
Further, the internet and e-commerce have revolutionized global trade, making purchasing, selling, and acting as a third-party reseller more natural, as reported by Trucking Info. Unfortunately, the same improvements that lead to the creation of mega-supply chains have also created a significant problem for the trucking industry. With fewer trucks on the road that have available capacity, more freight volume and changes in distribution channels have led to what the industry calls a “Capacity Crunch.” A capacity crunch means it is increasingly difficult for shippers to find space on trucks for freight and thereby, it is more difficult for shippers to manage freight as effectively. Shippers want lower rates, but due to these market forces and technology evolutions, lower freight rates are hard to come by.
With the advent of the ELD Mandate, it is apparent that the industry is moving towards an increased use of data and automation to aid in visibility and improving efficiency around current manual processes. It begs the question: Is Blockchain the next evolution for the trucking industry to implement alongside other automation and technology investments in the industry? This question is the direct catalyst that created the Blockchain in Trucking Alliance that ShipChain is a member of.
Blockchain and Trucking Restore Visibility to the Supply Chain
Blockchain and trucking are made for one another. Blockchain is a tracking technology and trucking requires tracking. It is a simple concept and the marriage of blockchain and trucking initiatives will position supply chains to stay competitive and reduce costs, as well as maintain compliance with local, state, federal and international laws governing shipping.
As explained by Trucks.com, this is due to the ability of blockchain to track virtually any data entry on any given network. In freight management, the use of blockchain and trucking means improved freight services, ranging from freight scheduling to payment processing.
Every entity within a supply chain (including but not limited to freight brokers, third-party logistics providers, shippers, business-to-business resellers, suppliers and reverse logistics maintenance and management centers) can benefit from the marriage of blockchain and trucking technologies.
How Blockchain and Trucking Are Made for Each Other
The most significant benefits from using blockchain and trucking together derive from improvements to efficiency, proficiency, accuracy, and timeliness of activities.
For example, consider how blockchain technology is used in these areas:
- Payment processing. Payment systems that use blockchain technology can help prevent fraudulent activities in freight management. If a shipment is scheduled to go out at a given time, the blockchain ensures the shipper, freight forwarder or other party understands when the load is scheduled for pickup. Upon arrival at the destination, blockchain technology can be used to verify payment has been completed, eliminating the need for costly systems to initiate ACH payments, confirm payment details and much more.
- Better freight classification and rating. Take a moment to think about the use of loading technology, it’s used to keep track of all freight for carriers and third parties in the supply chain. Shippers know what needs to be sent and carriers have a reasonable expectation for the amount and volume of freight to be shipped. Blockchain technology allows all parties to see the projected demand, and as a result, they can identify the most cost-effective way to move product. For carriers, this means showing the proper freight rate, and for shippers, blockchain can be used to verify carrier selection. In the modern world, dozens of individual carriers may exist, so being able to look at information and check the information’s validity is essential to getting the best rate possible and delivering on promises.
- Greater traceability, perfect for providing real-time alerts. Customers, including end-users and business to business customers, expect to know where freight is located at any given time, when the freight will arrive, what forces might be causing delays, why delays occurred and much more. Customers tend to find the company at fault for shipping issues, not the carrier. So, when appropriately integrated with a company’s resources, the use of blockchain technology can be used to provide real-time insight into product location. This is essential to lean supply chain strategies, especially for companies leveraging just-in-time inventory management strategies.
Take Advantage of Blockchain-Based Technology to Secure Your Future Now
The trucking industry is on the verge of a revolution. The trucker shortage continues to worsen as capacity grows tighter with each passing day. Meanwhile, the hours of service guidelines and the ELD mandate are pushing existing fleets to their breaking point and documentation for freight is more complicated than ever. Instead of merely hoping for the best in an era of exhausted capacity and limited truckers, organizations should start thinking about how they can streamline the shipping process.
Fortunately, blockchain and trucking are two parts of the supply chain that are made for one another. Blockchain technology has the potential to eliminate all tracking issues, ranging from the location of the truck to ELD reporting. Instead of fearing what the future of trucking holds, explore the possibilities of blockchain and tracking initiatives within your company. Welcome the future and sign up for ShipChain alerts as we continue developing the ultimate blockchain and track & trace platform.