There’s a new star brightening the IT heavens: Blockchain. The principle of chain distributed, encrypted databases was initially seized upon as the ideal technical basis for cryptocurrencies like Bitcoin. The approach has now also gained popularity in the logistics field. Many are even saying that its various applications represent a digital revolution for the transport of goods.

Transparency creates efficiency

The benefits of Blockchain for logistics are easy to summarize: better security and traceability of shipments. But how does it work? Imagine a digital ledger that records all transactions in encrypted form. Instead of storing that book in a central location, many copies are prepared of it, and then distributed decentrally to anyone involved in the process. The copies are synchronized: If one is changed, then the others change too. This makes it impossible to delete or edit the data without others noticing it. The system is secure against manipulation.

This lend itself to a variety of uses in logistics: For one, the movement of objects can be recorded gaplessly — it is reliably clear at all times where the goods are actually located. For another, Blockchain makes document management easier, as each member of the chain has access to relevant documents. A variety of processes that to date have run through paper can now be digitized and framed more efficiently. This has a noticeable effect on goods transport in particular, where countless paper documents are perpetually sent back and forth between the various parties. The costs of this inefficiency are immense and involve long waiting times — precisely the factors that a Blockchain application can fix.

Companies jostling for market leadership

IBM in particular is hunting for this this kind of solution. Its joint pilot program with Maersk seeks to replace the necessary paperwork with Blockchains. The goal: allowing all actors to review the delivery chain in real time, with document shipment handled automatically and digitally to prevent fraud and error. The project involves a platform that IBM hopes will carry it to the forefront of the movement. Yet Maersk is just one of numerous collaborative partners helping improve the platform.

There’s also a large pool of startups promoting similar projects. CargoChain and Everledger are also currently working on programs to bring Blockchain to retailers. A growing number of companies are pushing onto the market in other fields as well. It remains to be seen which of the current players, if any, will gain the upper hand. What is clear: logistics pros should absolutely keep an eye on these trends.

This revolution won’t happen from one day to the next, not with some of the problems that remain to be solved. One is the huge energy consumption involved with maintaining the necessary computational capacity. Beyond this, there are also privacy protection concerns, as internal Blockchain systems do not provide anonymity to participants in the way that Open Source models do. Yet there’s no denying the massive potential behind the technology. The path to dominance for Blockchain seems clear.

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