How Blockchain Improves Logistics: Benefits, Drawbacks, and Use Cases

The blockchain technology and logistics industry tend to be quite profitable for each other. Additionally, this collaboration brings benefits to carriers and customers.

In this article, we’ll discuss all you need to know about blockchain in the logistics sector. 

1. PROS OF INTEGRATING BLOCKCHAIN INTO LOGISTICS

Blockchain allows optimizing logistic processes in the real-time mode. This technology tends to improve the relationship between shippers and carriers. 

We've singled out six main advantages of using blockchain in the logistics sector. Let’s discuss them more precisely. 

Simplified Workflow 

There are a lot of documents required for the transportation process. For example, a bill of lading or B/L. It stands for an agreement that consists of transportation terms, conditions, and other issues. 

Blockchain allows recording all the steps. As a result, any participant can look through the delivery chain. If something happens, recorded information will report a problem.

Improved Routes

Blockchain allows optimizing routes and delivering faster. In this case, smaller companies can compete with bigger ones, offering faster routes.

As a result, it’s possible to reduce expenses on the shipping process.

Automated Certification

Blockchain simplified the process of goods certification. The combination of IoT and blockchain allows creating smart contracts.

Fraud Reduction

Transactions made on blockchain are secure. It’s impossible to change something in the transaction. It leads to decreasing fraudulent operations. 

Intermediaries Elimination

Intermediaries stand for agents that take part in the transportation chain. However, with logistics software development, the industry doesn’t need such specialists.

Smart Contracts

We’ve already mentioned smart contracts. They tend to reduce time and expenses. Also, both parties have an opportunity to automate the validation process, manage obligations, and so on.

There were main blockchain advantages. As you can see, this technology can be quite profitable for the logistics industry.

2. CONS OF INTEGRATING BLOCKCHAIN INTO LOGISTICS

Of course, there are some disadvantages of using blockchain technology. Let’s discuss them more precisely.

Increased Unemployment

Blockchain allows automating supply processes. As a result, there is no need for various specialists. The number of unemployed workers will rise.

Standardization of Business Processes

Businesses that use blockchain technology should have a standard process. Unfortunately, these days, businesses don’t have one. 

It’s required to create a standard process on the government level. So, businesses can follow it to avoid some common problems.

Integration Expenses

It’s evident that blockchain development is expensive and time-consuming. Additionally, it’s required to have powerful hardware.

Also, there are expenses on specialists that are experienced in blockchain integration.

So, blockchain is a quite expensive technology that requires additional preparation before using it. However, some companies have already integrated blockchain and got some profit.

3. BLOCKCHAIN USE CASES FOR LOGISTICS INDUSTRY

Tracking Things During Delivery

Blockchain makes it easy to track goods during shipment. Additionally, the companies have an opportunity to monitor the conditions of the packages.

As a result, it’s possible to detect broken goods, spoilt products, and so on.

Of course, such opportunities lead to decreasing unnecessary expenditures.

Successful story. Walmart cooperates with IBM to use the blockchain technology in the logistics. The system allows seeing what products are sold. Also, it’s possible to know the location of the product (the particular warehouse). The company claims that the supply process becomes more transparent.

Simplified Transportation

Blockchain allows reducing the number of documents required for transportation. Additionally, the number of mistakes will also decrease due to automatization. The shipping terms fulfill more precisely.

Simplified Payment Procedures

Let's face it — payments are important for any business. Blockchain makes this process secure. For example, it’s possible to make transactions with such cryptocurrencies as Bitcoin. As a result, the payment process is secure and transparent. Also, such solutions improve international processes. 

Successful story. Tallysticks has made a platform that simplified payment processes using blockchain. The solution offers smart contracts that can be customized depending on the business needs and requirements.

Verification Process

Blockchain gives end consumers an opportunity to simplify the authenticity of the goods. There are platforms with data about product origin, quality, fineness, and others. 

This technology gives clients transparency. As a result, people trust companies more.

Improved Business Cooperation

Blockchain makes cooperation easier. For example, enterprises can cooperate with small companies to deliver goods faster. Such a solution is profitable for both parties.

These days, companies can cooperate with each other without intermediaries. It leads to cost reduction and improved delivery processes.

Successful story. ShipChain platform uses blockchain to improve cooperation. For instance, the service allows tracking the delivery from the warehouse to the buyer's door. It leads to better customer experience and satisfaction.

Disputes Settlement

The delivery process is long and expensive. Also, there can occur various delays due to weather conditions and other issues. 

Usually, to manage such issues, companies hire lawyers. However, blockchain changes the situation. The transportation process is tracked from the beginning to the end. So, both parties can see any changes in the route.

Also, the parties can monitor any issues connected to the delivery and decide whose fault they were.

Blockchain technology innovates the logistics sector. The companies can simplify the delivery process, making routes shorter. 

All these solutions lead to customer satisfaction. As a result, the clients trust companies and order goods or services more often.

The main advantage of blockchain is transparency. Business owners, as well as end consumers, have an opportunity to track the delivery process. Also, customers can ensure that during the delivery the storing conditions were followed. 

However, developing blockchain-based solutions is an expensive and time-consuming process. Companies have to prepare beforehand and single out the requirements of the final product.