Trillion-Dollar Shipping Industry Betting Big On Blockchain
Written By: Jen Neville
September 18, 2018
In the United States shipping and logistics accounts for nearly $1.5 trillion each year. With networks of producers, shippers, and consumers coordinating to access products, inefficiencies are an inevitable industry reality. In an effort to address these problems, companies around the world are working to revolutionize shipping and logistics through the instant and immutable properties of blockchain technology. Technology giants are predicting that traditional enterprise clients will seek to integrate blockchain technology into their businesses in the future.
As legacy sales decrease, goliaths like IBM see blockchain as the supply-management tool of choice.The global logistics industry was valued at USD $8.1 trillion in 2015, and as the global economy grows it is estimated that this number will reach USD $15.5 trillion by 2024. Leading logistics and blockchain technology companies such as DMG Blockchain Solutions Inc., Descartes Systems Group Inc., Blockstrain Technologies Corp., Drone Delivery Canada Corp. and AXS Blockchain Solutions Inc. have begun addressing issues within the shipping industry.
Is the industry ready for such rapid development? No.
The global logistics industry currently relies on outdated systems of organization to conduct business. These systems are rife with delays due to human error, poor communication, and other breakdowns. Blockchain technology offers a unique opportunity for these systems to be replaced, ushering in a new era of automation and efficiency.
In late 2017 UPS realized blockchain's enormous potential to transform industries, joining the Blockchain in Trucking Alliance. Created for people working in the freight industry to improve standards and education around blockchain, BiTA is known for bringing major freight technology companies together to develop blockchain technology. Another recent notable member is German software giant SAP SE, who became BiTA members last year.
Solving Logistical Issues With Blockchain Technology
AXS Blockchain Solutions Inc. is following the footsteps of UPS by betting big on blockchain logistics with its recent acquisition of Chainlinks Lab for CAD $4,000,000. Chainlinks is in the final development phase of a blockchain-based logistics platform called 1Shift Logistics. The platform aims to solve the fragmented marketplace of suppliers using outdated legacy systems that require a manual workforce to complete routine and simple tasks. 1Shift aims to solve the existing logistical issues in the trucking industry by improving transparency and reducing the likelihood of human error.
"The acquisition of Chainlinks allows AXS Blockchain to dive deep in the trillion dollar logistics industry. With the advent of blockchain, AI cognitive search and smart contracts there is a great opportunity to simplify, streamline and create transparency in the supply chain. Utilizing a mix of these technologies in a revolutionary eco-system can solve real-time tracking and tracing issues, live escalation updates to mitigate downtime and simpler payment settlements to name a few," commented AXS Blockchain CEO, Mo Ahmad.
For freight brokers, 1Shift can provide instant solutions for major issues such as cargo protection and delivery efficiency within both the logistics and transportation industries. By providing all parties involved with a single customized dashboard for tracking freight payment, rates, financial metrics, and budgeting, 1Shift will increase shipping reliability and visibility in order to maintain intermediary relationships.
Descartes Systems Group Inc is another company that provides a logistics software-as-a-service solution aimed at improving the efficiency, operational performance, and security of logistics-intensive businesses. With a current stock price of $44.34 CAD and a market cap of $3.4 billion, it is plausible that investors believe in the power of blockchain technology.
Global cargo theft is estimated to cost $60 billion USD per year.The United States is said to lose nearly $35 billion alone. These losses hurt businesses and cost consumers, offering a unique opportunity for blockchain-based solutions to recover a massive amount of profit. The North American trucking industry is also a very fragmented marketplace. There are over 500,000 trucking companies in operation across the continent, each of which must conform to a complex initial vetting process. These companies lack the appropriate tracking tools to monitor their shipments, exacerbating an inefficient system.
Lost, late, and damaged goods are a common problem in the shipping industry. These issues are often discovered after it is too late, creating a loss for both shippers are manufacturers. Many of these issues could be solved by the automation and security provided by blockchain-based logistics systems. By reducing the need for human input, blockchain technology can provide a seamless solution to many of these easily-automated issues.
Linda Weakland UPS's Director of Enterprise Architecture and Innovation, is long on blockchain. She stated that "It has multiple applications in the logistics industry, especially related to supply chains, insurance, payments, audits and customs brokerage. The technology has the potential to increase transparency and efficiency among shippers, carriers, brokers, consumers, vendors and other supply chain stakeholders."
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