By Rahul Raj
The world is abuzz today about blockchain technology and the potential it holds to transform the business ecosystem. This avant-garde technology is a universal donor of sorts because it can be implemented across almost every industry vertical across the world, although the sectors benefitting the most will be the ones who need large data records. This technology is currently bespoken for the financial sector, but actually its inimitable nature is nudging our entire ecosystem, into a new era of digital transformation.
Looking at our industry, one of the most cumbersome and labour-intensive sectors is the transport and logistics segment. Traditionally, this sector deals with a myriad of policy paperwork, regulatory permissions and hordes of intermediaries, all of which often leads to operational delays, high costs and fraudulent practices. The transport sector can be broadly divided into B2B and B2C segments. The business segment involves freight transportation and supply chain management, while the consumer part includes public transport and services.
Let us look at the bigger part of the pie, the B2B segment, and as per Morgan Stanley reports, the revenue opportunity for blockchain within the freight transportation space could end up being as much as $500 billion. But how will blockchain benefit this sector? First and foremost, blockchain is a digital ledger, hence it solves the issue of manual paperwork and recording physical files of thousands of transaction receipts, approval documents, supply-delivery sheets, etc. All this information will be more secure on the blockchain network and easy to retrieve whenever needed, rather than deep diving into a paper pool to source relevant documents. Any judicious company will mark the savings on paper cost for a year as a significant cut in operational cost.
Another succour of blockchain will be, mitigating the middlemen. The whole transaction is visible and recorded in the ledger for both buyer and seller to monitor, so one need not have intermediaries. Thus the sector can have a leaner business framework, leading to efficiency and further benefit to operational cost. Often these middlemen tend to infiltrate the system for illicit practices which might garner heavy losses for the company, so essentially we can tackle frauds and corruption to a large extend.
While there is sundry of benefits in implementing blockchain technology for the transportation sector, few highlights include:
Bringing transparency and compliance in the sector, as all records are secure and visible to all stakeholders in the system.
Improve payments and audits, as there will be fewer intermediaries and the status of payments will be on record. Secondly, for the information required will be available at all time to assist audit.
Better tracking, as the company will be able to monitor the journey of the goods on the blockchain network and also procure information related to any consignment.
Identify fraud or malicious effort, as all the data is stored using smart contracts and cannot be tampered. Any alteration made will easily be red flagged in the system. This also helps to track damage or loss of goods, as the entries in the network will pin-point the exact stage of the itinerary, where the liability lies.
Builds customer faith, as the whole process becomes transparent and accountable, it will be easier to transact the business.
Understanding this transmutation in the business, it is imperative to have an association or official body to scrutinize the operational framework of the sector on this new technology. Hence organizations like BiTA was formed by experienced tech and transportation executives to create a forum for the development of blockchain standards and education for the freight industry. The focus is to bring together leading companies in the freight technology industries that have a vested interest in the development of blockchain technology.
Overall, the use of blockchain technology in transportation sector has endless possibilities, right from simple asset tracking and transparency to real-time feedback from customers. If we mingle blockchain with IoT, the possibilities multifold further. For example, assume we need to transport a handcrafted carpet from India to America, so the carpet is loaded as a consignment from the origin location and geo-tagged using IoT capability. Now the consignment is not only tracked by the supplier, but when the consignment reaches the overseas destination, the geotagging confirms the receipt of the carpet and bitcoins equivalent of the carpet price gets transferred from buyer to seller, with no middleman or any paperwork!
Doesnt the plausibility of such a scenario really blow our mind!
Rahul Raj is Co-Founder and CEO of Koinex.