How much could logistics save by implementing blockchain?

The logistics industry is constantly looking for new ways to optimize and simplify its work. One of the innovative solutions that is gaining more and more use is blockchain technology. It allows us to effectively solve problems with documentation, which often causes delays in processes and additional fees.

Many international companies are already successfully operating blockchain technologies in logistics, saving large sums of money. For example, about $40 billion can be saved on documentation alone. How is this possible? The use of a distributed ledger guarantees transparency, security, and process automation.

The blockchain logistics industry has a number of projects worth following and even considering investing in. Some of these projects offer their own tokens (or coins) that can be purchased on an exchange.

Bluntly put, a blockchain is a decentralized and open transaction database that stores an ordered chain of records (blocks) that cannot be changed or deleted; only new transactions can be added. Its advantages include:

  • transparency,
  • reliability of data storage against fraudsters,
  • organizing.

By the way, this kind of ledger is used to track all transactions related to cryptocurrencies.


Curious! Blockchain is also used not only in the field of cryptocurrencies but also in international payments, copyright protection, and contracting, as well as in government, healthcare, and, of course, logistics.


Using blockchain technology in logistics supply chains

The global logistics market is expected to be worth $13.3 trillion in the next 5 years. In 2021, it was worth $9.5 trillion. Although the logistics industry is experiencing rapid growth, there are factors that slow down the process. Among them:

  • human factor;
  • difficulties in maintaining and organizing documents;
  • numerous counterparties.

The blockchain system can not only solve these problems but also increase GDP and save more than $40 billion on basic transactions.




As a reminder! Logistics not only covers the production and choice of transport but also the quality of transportation, communication with intermediaries, finding the right route, etc.


Benefits of Blockchain in the logistics industry

Due to the fact that document flow in the logistics industry is usually stored in different accounting systems, the process can have many issues with work organization. For example, cargo may be lost, additional costs for document management may arise, etc.

Requesting experienced logistics will help you plan the entire supply chain, and blockchain can improve the bureaucratic component due to the following qualities:


Transparency of the supply chain

The technology provides transparency and tracking of every step in the supply chain. It allows all parties involved, such as manufacturers, suppliers, carriers, and customers, to see and verify information about the location of your cargo you can get from logistics tools, delivery times, and the condition of the goods. Blockchain makes all data publicly available without the possibility of changing anything in favor of unscrupulous parties to the transaction.

Another advantage is that the customer can see the results of the counterparty's previous work and decide whether to cooperate with it.


Building a higher level of customer trust

In line with the previous advantage, transparency will make customers trust you even more. After all, they will be able to check when and how a certain product was manufactured and make sure that the seller is honest. This will not only help build a positive reputation in the market but also attract new customers to your business.


Speed up shipping and reduce costs

Technology can simplify and accelerate the processing of delivery-related documents, including waybills, shipping documents, customs declarations, etc. This can minimize delays by making delivery times shorter. Furthermore, blockchain can help reduce the cost of administrative procedures such as document verification and confirmation operations.


Noteworthy! Entrepreneurs spend 10-15% of corporate budgets on maintaining all corporate documentation, which in the long run can bring significant economic benefits and reduce company spending. Perhaps the biggest advantage of using blockchain is that the data can't be changed. Thus, it not only makes business even more transparent for the consumer but can also protect entrepreneurs from fraudsters and unscrupulous partners.


As for the disadvantages of blockchain implementation, there are hardly a few exceptions:

  • The technology can face scalability issues, especially with a high volume of transactions.
  • Maintaining a blockchain infrastructure can be expensive, especially in the case of large amounts of data and heavy network usage.
  • Some public blockchains, such as Bitcoin, require significant computing resources and consume large amounts of electricity to ensure the security and trustworthiness of the network.


Blockchain solutions in logistics

Many global companies have started to implement blockchain technologies. Among them are the following market leaders:

  • Mastercard uses blockchain in the CryptoSecure system. It focuses on strengthening security in the field of transactions. Thanks to it, banks can track and block transactions on exchanges with a high risk of fraud, which helps prevent fraud, identity theft, and other types of financial crime.
  • Nestle lets customers know what their products are made of. To do this, they have implemented the Food Trust blockchain, which registers data on the collection period and origin of ingredients needed to make a particular product. It also records information on some transactions. Thanks to this, consumers can be more educated about products, and the supply process is more transparent.
  • By the way, according to the Drug Supply Chain Security Act (DSCSA), in 2023, all pharmaceutical companies in the United States must switch to EPCIS standards to track medicines in the supply chain. This includes the use of blockchain technologies to ensure transparency and security in logistics processes.

These are not all the companies that use blockchain in their work. Others have also joined the trend: Microsoft, Intel, Siemens, Samsung, BNP Paribas, JPMorgan Chase, Maersk, and many other global companies.


Final Thoughts

Blockchain in logistics is not only about optimizing operations but also about the potential to save billions of dollars that were previously spent on maintaining standardized documentation.

The technology provides transparency, which is critical for cooperation with partners and customer satisfaction. In addition, it guarantees reliable data protection.

Corporations, led by Microsoft, are already using blockchain successfully in their work, demonstrating the great potential of the technology. This may become an incentive for Ukrainian businesses to join the international trend and use this technology for their development.

Sophia Shkuro is a content manager from Dnipro, Ukraine. Believes that the more complex a thing is, the easier it should be to write about it. Dreams of a future vacation by the sea.

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