By Jacob Prinsen, MacKay & Company
There has been a lot of buzz recently about disruptors to the trucking industry: autonomous and electric vehicles, last-mile delivery and blockchain. Blockchain may not be as glamourous as those other disruptors but it may prove to be more revolutionary to the industry.
Blockchain was originally developed to record financial transactions for cryptocurrencies, such as bitcoin. At a high level, blockchain is an immutable distributed ledger. All members of the chain hold an identical copy of the ledger that cannot be altered. As new blocks are added, the members verify the block with complex mathematical algorithms. If it is valid, it is added to the chain and all ledgers are automatically updated.
Although blockchain was developed to maintain financial records, it is not limited to that use.
For example, Walmart currently is using blockchain to track who is supplying its leafy greens. This will prove to be an effective and efficient method to identify the source of bacteria outbreaks and remove them from distribution. FedEx is another example of a company using blockchain; the company has a pilot program to aid its customer service by tracking customer disputes.
Blockchain has the potential to be a game changer in the trucking industry if it can achieve widespread support. There are many potential applications in the industry. Three promising uses are smart contracts, maintenance logs and shipment monitoring.
Smart contracts are an area where blockchain can have a huge impact on the industry. Craig Fuller of Blockchain in Trucking Alliance suggests that $140 billion is held up each day because of payment disputes. Blockchain can streamline this by eliminating disputes over invoices. The buyer and seller set the terms of the agreement and, prior to the shipment, the buyer deposits the payment for the service which is held until the terms of the agreement are met. If the terms are not met, the payment is automatically refunded to the buyer.
Smart contracts would help the industry by making the buying pro-cess more efficient and establishing a level of trust among its users because they inherit the secure nature of the blockchain. Once a contract is set it can-not be altered.
Another use is in tracking maintenance. One of the biggest challenges with vehicle maintenance is preventing downtime. To combat this, fleets are turning to predictive analytics. Block-chain provides a medium for telematics and technicians to provide their data in a standardized format. As a result, fleets will have access to all maintenance and repair data, as well as any fault codes produced by the telematics in one location. This will allow fleets to more easily identify trends and can prove to be invaluable to fleets.
Monitoring shipments of temperature-restrictive products, such as produce and pharmaceuticals, can be improved with blockchain as well. When partnered with the Internet of things (IoT), block-chain can record more insightful data, such as temperature or pH levels. This can be communicated with drivers who can intervene if a temperature or pH level approaches or exceeds a threshold. This could be a significant breakthrough in reducing spoiled deliveries.
It is clear blockchain has the potential to disrupt trucking. However, it also offers practical business applications and can help processes become more efficient and effective.
Blockchain is coming. Embrace it or be left behind.