Transport companies are starting to look at how the technology has the potential to make supply chains more transparent and secure and enable smarter and more efficient logistics.
There are many examples, across a range of industries, of blockchain being used to increase visibility and transparency across supply chains.
The technology can record and store not only the exact location of the product in real time but also where it has been, the checks it has passed and also information about the state of the product (e.g. which temperatures it has been exposed to) in a tamper and forgery-proof way. All of this can be accessed by the numerous businesses in the chain and even the end-customer when they scan a code on a product.
The logistics processes that underpin global trade are complex. A refrigerated shipping consignment can often have over 200 interactions before it reaches its end destination. Documentation (such as the bill of lading) is often paper based and highly bureaucratic. It becomes inevitable that existing logistics processes will be slow, inefficient and liable to human error.
By adding stakeholders to a blockchain solution, the process can be entirely digitised by using self-executing approval processes allowing stakeholders to give electronic approval for the movement of goods in real time. This reduces delays and minimises the cost of existing administrative and documentation approval processes.
Blockchain technology ensures that data can be shared between stakeholders in a secure and immutable way, creating an automatic audit trail for regulators, something which, given the use of existing paper based processes, the industry has struggled to do.
Smart contracts enable the self-execution of contractual provisions, which have been agreed upon and then been written in computer code. They trigger automatically once pre-determined conditions have been met.
Smart contracts in the logistics industry have the ability to automate commercial processes the moment that agreed conditions are met.
Smart contracts are being used to facilitate dispute resolution when goods have not been delivered correctly or have been damaged in transit. When used in combination with interconnected devices such as sensors or trackers, it is possible to determine whether goods have been delivered in accordance with the agreed terms in the contract (e.g. temperature, light, time). If the goods have not been delivered correctly, the smart contract can automatically trigger compensation or damages in accordance with its terms without the need for human involvement.
Supply chain management
Blockchain could be a game changer for supply chain management. Logistics businesses could insert provisions into smart contracts so that, if the condition of the goods are not correctly maintained during transit (for example, perishable goods not being maintained at the correct temperature), those goods could be immediately, and automatically, re-ordered. Using blockchain in this way prevents the need to wait until goods have reached their destination before such issues are discovered saving both time and money.
In an environment where consumers expect a seamless and efficient end to end supply chain, and will base their purchasing choices on this factor, logistics companies must learn to compete on more than just price if they are to attract more cargo. Blockchain is just one of the ways large freight and haulage companies are looking to streamline and secure their approach.
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DWF’s market leading transport experts have come together to explore how Blockchain is disrupting the industry. We understand this complex technology and its legal ramifications and our transport sector experts are here to guide you through what the changes may mean for your business.