How Will Blockchain Ledger Technology Impact Shippers?
Blockchain ledger technology is changing the way people do business. The shipping industry is no exception. The increase in e-commerce has generated a need for more efficient and advanced shipping industry. Any company in the industry could benefit from training a team in Blockchain technologies or hiring an outsource company to apply this technology in their operations.
How many times have you order something online and it never came? Blockchain will change a lot of aspects of how shippers work that will give a better customer experience, faster shipping time, and lower costs.
What is a Blockchain Ledger?
Blockchain is the technology behind every cryptocurrency, and it has gained a lot of popularity thanks to Bitcoin. But, Blockchain technology has many more applications that will change how we do business today. A Blockchain ledger is a digital database that stores transaction information.
The winning quality of a Blockchain ledger is that it’s distributed between all the computers in a network. In other words, every time a transaction occurs, a record of it is sent to the system; every computer has to approve it, and then it is stored on the ledger chain to the last record.
Every record is called a block, and that’s why the technology is called Blockchain—it is a chain of blocks that contain information. It is transparent because any user in the network can check the data whenever they want.
At last, it is immutable because every block is put on top of the other, and once a new block is added, you can’t change the ones under it, plus all the users will know if a change is attempted. So basically, a Blockchain ledger is a digital book that keeps records and makes them transparent, immutable, and decentralized.
What is a Smart Contract?
Smart contracts are the revolutionary invention made thanks to Blockchain. It consists of a contract that executes itself. It is a code that represents business logic. The Software Developer writes a set of rules; then, the contract can verify these rules and execute itself when the rules are met.
Thanks to smart contracts, business transactions can become automated. And because they are Blockchain applications, they are also transparent, immutable, and don’t need third parties to interfere. Plus, they are also excellent at storing data.
Imagine an online store using a smart contract. The rule programmed in the contract is probably that the client has to make a payment. Once the payment is verified, the client will receive the product. Most online stores nowadays use third parties like banks to make transactions, but this will change soon.
How will it Impact Shipping?
The supply chain is a very traditional industry, but they are trying to introduce new technologies. One of these technologies is Blockchain, which has many applications for almost any industry. One of the issues Blockchain could change in the shipping and supply chain is the extensive use of paperwork and the use of centralized databases.
Shippers have to keep records of a lot of information, including transactions, tracking numbers, bar codes for each product, locations of the drivers and trucks, and much more. This process results in a lot of money spent on tech power and warehouse space for servers to store the data. In addition, it requires a lot of human resources to check that everything is going as it suppose to continuously.
These are the parts of the supply chain industry that will see more change with the introduction of Blockchain ledgers:
With the immense growth that e-commerce has had in the last few years—especially this year with the pandemic—shippers are in high demand. Many shipping companies have been created to try and met the need. In the shipping industry, 90 percent of the companies have a fleet of 20 trucks or less, which means that big companies have to work with many shipping businesses to move all their products.
Now, each shipping business has its philosophy for how they work and what they offer. So imagine the headache of trying to keep track of every shipping company and what they are supposed to provide you with. To try and solve this problem, the Federal Motor Carrier Safety Administration created seven pillars of compliance to regulate carrier compliance in the industry.
But the seven pillars of compliance means a lot of paperwork and tedious bureaucracy for a new company entering the industry. Blockchain could change this by making the process a lot easier, standardizing carrier compliance for all companies in the shipping industry.
Because Blockchain makes everything more transparent, the customer will have access to all the steps in the shipping process. They will be able to check where their product is at all times and know exactly what happens if the product is lost or stolen. They will also be able to check the shipper records to see if they are a trustworthy company, and will allow them to make better decisions on where to buy things.
In the farmaceutical industry, for example, 10 to 30 percent of the medicine sold in developing countries are counterfeits. With Blockchain, all the companies and users that participate in the process can verify that what they are receiving is legit. You can say it is a significant improvement if a patient can know if the medicine they are taking will actually save their lives instead of killing them.
As mentioned before, the shipping industry manages tons of paperwork for multiple parts of the shipping process. This issue not only makes the process slower, but it creates more room for error and losses. By using Blockchain and smart contracts, companies can automate many parts of the process, making operations faster and less expensive.
Society is demanding faster shipping services every day. So Blockchain can optimize every part of this industry, especially the part where workers have to validate every information before letting the cargo continue.
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