Experts from Worldcore, an international fintech company, attempted to examine how blockchain technologies will assist logistics companies in the near future. It came up with three entirely different scenarios of technological integration.
It’s hard to overestimate the significance of product delivery systems and logistical systems in the economic circular flow in the global world. Goods manufactured at a plant in China are laying on a shelf in a Central European store just a month later. In order for this to work, the goods flow chain should include a specialized logistics company/3PL-service provider, or a proprietary logistics department with distribution centers throughout the world within the manufacturing holding.
Delivery speeds are striking even now, but let’s consider how they can be further increased by utilizing new blockchain technologies that burst into our lives in the recent years. In its research study, Worldcore, one of the most successful European financial startups of 2017, presented various ways of using blockchain to control deliveries and decrease shipping costs.
“The main problem of modern intermodal shipping in logistics, aside from the technical aspect of transport operations, is providing the information on the cargo and its movement to the logistics service providers and clients,” describes the functional difficulties of the logistical department the head and founder of Worldcore Alexey Nasonov. “Product movement databases are not standardized, belong to different companies and are not filled in a timely manner. Everyone who had, for instance, encountered the work of post services, which historically are the first logistics service provider, will know what I mean.”
Post services do not, in fact, work in a particularly prompt manner throughout the world, but the greatest difficulties emerge when several postal services of different countries that do not have an end-to-end indexing of the shipped goods are involved in the delivery chain. For instance, the cheapest 3PL AliExpress services function in this manner, delivering goods without customs clearance, as transit shipments, to cheap post services (for Russia these include those of the Baltic countries, Finland or Mongolia). Then the shipments are transferred to the addressee, sometimes even without a trackable number, under a different internal number.
Worldcore analysts projected three different ways for controlling the flow of goods more effectively using new blockchain technologies.
The first is the more effective management of the transportation fleet using blockchain. This includes registration, surveying and insurance, fleet tracking, etc. Alexey Nasonov’s article “How blockchain will change the autoindustry” covered this issue in detail in relation to the automotive industry. Most of the proposals are relevant to other modes of transportation as well. The already-launched ICOs related to managing transportation fleets include Oaken, FOAM, Tesloop, HELBIZ, DACSEE, Geeba.
The second and the most apparent one is tracking the product by its unique number or code. The generation of a unique code as a wallet number on one of the blockchains, which is linked to all of the logistical information, may be a certain nuance. The wallet number is unique, despite the fact that it is generated by an offline algorithm without being tied to the blockchain itself.
There are also several examples of existing ICOs:
- ShipChain — declared tracking from manufacturing shop or garden bed straight to your home,
- Smart Containers — creation of specialized containers for delicate cargo that independently report to supplier and buyer,
- OEL Foundation — shipping management using the ecosystem under development.
The third is the establishment of a decentralized freight carrier marketplace. There are freight carrier marketplaces or exchanges, where carriers find primary or secondary clients. In Russia, the main exchanges are ati.su, cargomart.ru, trans.eu, cargopedia.ru. For individual and one-time shipments it is, as surprising as it may be, avito.ru.
Shipping management, including payment warranties and cashing out letters of credit using smart contracts, is also included here.
- Marine shipping exchange — shipnext.io, BitNautic
- Tracoin — marketing events and bid stimulation on the logistics market, as well as a settlement ecosystem
- AirChain — an air delivery ecosystem
Projects like CargoCoin and IMMLA are a distinct example — they integrate shipment tracking services with shipper exchange and ecosystems that allow to settle delivery payments using cryptocurrency smart contracts.
“According to World Bank, about 13% of the global GDP is taken up by logistics and shipping costs,” sums up Alexey Nasonov. “Even the simplest shipping management system, not to mention complex payment and control ecosystems proposed by some ICOs, saves 20–30% of the shipping costs.”
Blockchain-based ecosystems may propose several 3PL companies integrated by a smart contract into a single worldwide delivery payment, insurance and tracking system instead of one major provider, which will allow to use logistics micro-providers that are most efficient in their sphere or service geography.
Experts believe that these are the logistical systems that will be in place in the foreseeable