When Logistics Runs on Blockchain

Blockchain technology will revolutionize logistics industry in the next five years. At its core, blockchain is a transparent system for storing data that is economically, cryptographically, and mathematically impossible to corrupt. What this means is that once data is stored on the blockchain, it is there forever, freely available to view, and is impossible to change. A key concept of blockchains that is often lost in typical explanations of them is that a blockchain is a transparent source of truth. It is virtually impossible to change or hack the history of a blockchain. Blockchain will be leveraged to transform current systems for compliance, financial transactions, dispute resolution, and just about every other facet of the logistics industry.

If you’d like an in-depth understanding of blockchain, and want to understand it at a more technical level, this is a great article.

Smart Contracts

A fundamental problem in the logistics industry is that you sometimes have to conduct business with and place trust in parties that you may not fully trust; frequently entrusting hundreds of thousands of dollars worth of goods, or extending credit to a company with whom you’ve never transacted business. Even when dealing with a party that you have a long, trusted business relationship with, its not uncommon to have a significant amount of money stuck in accounts receivable, effectively unusable until it is released to you by someone in the accounting department from that other organization.. Smart contracts will allow businesses to conduct trusted transactions and agreements with parties that they may not fully trust (like a new customer) and know that the contract will immediately execute only if all of the agreed-upon criteria are satisfied. Smart contracts are automatic, self-executing contracts that rely on data stored in the blockchain to be fulfilled. Essentially a contract between a buyer and a seller, written into lines of code, that is only carried out when the provisions of the contract are met.

This will allow companies running on blockchain technology to do things like only pay a truck once they are at a specific latitude/longitude as shown by their ELD, pay a facility a bonus for loading a truck within a certain timeframe, and just about anything else that relies on data that can be digitized.

Visibility & Predictability

When logistics runs on blockchain, common tasks such as re-routing due to delays and capacity monitoring could become routine and automated. Instead of waiting for a call from a driver or employee to inform you about a delay / hours of service overage/ extra space in a truck, that information would be immediately accessible and actionable without the human bottleneck. Blockchain and IoT devices like ELDs will let businesses automatically reroute trucks, detect excess or lack of truck capacity, and digitally gather other information about trucks, facilities, and loads which will enable them to not only know more about their own operations, but dynamically adjust to conditions based on real-world conditions.

Rate Dispute Resolution

Every logistics business has dealt with a customer disputing a bill. Whether because of a miscommunication, detention, or other accessorials, disputes happen. The beauty of smart contracts built on top of the blockchain is that disputes can be settled automatically via an arbitration process defined by the rules of the blockchain. If a rate, say $1.90/mile, is agreed upon in a smart contract, the it cannot be changed, and will necessarily be paid upon satisfaction of the criteria in the contract. Of course smart contracts can be extended beyond a simple rate-per-mile contract to adjust the rate in case of detention or lateness, and are limited only by the data on the blockchain. The core principal is that everything about a business transaction can be agreed upon by both parties before the transaction actually takes place, and the transaction will necessarily execute if the criteria of the agreement are met, even if the parties have not developed a relationship where they trust each other.


Another way to think about a blockchain is as a history of all transactions that every happened within a system. This lends itself perfectly to keeping performance & safety records on trucking companies. With the incorporation of truck performance data into a blockchain, the history of a certain truck or trucking company will be publicly available for all to see, it will necessarily be true and unchangeable. No more having to check three different websites or call references to validate that a carrier is who they say they are, and that they are safe enough to work with. The blockchain will be able to tell businesses more about a carrier than any reference or safety regulation entity ever could.

Looking Forward

Blockchain technology is a paradigm shift — the likes of which we haven’t seen since the adoption of the internet. This shift is not just coming, it’s already here: Walmart is already using blockchain to tackle problems in food traceability. This past spring, Maersk and IBM announced a partnership to incorporate blockchain into shipping. For domestic transportation, organizations like BiTA are forming to set the tone for blockchain in trucking.

At Fraight, we are marrying blockchain technology with our AI and NLP automation techniques. We envision a future where business transactions are automatically agreed upon through interactions with a customer, where smart-contracts execute based on deliveries made by self-driving trucks, and where compliance and customer service issues are handled by an AI Agent capable of fully meeting the needs of the task at hand.

Want to discuss blockchain, AI, NLP, or logistics? Reach out to alex@fraight.ai or follow me on twitter.

Originally published at blog.dynamo.vc on October 25, 2017.