Will Blockchain Technology increase the efficiency in Trucking Industry ?

February 27, 2023 Blockchain, Crypto, Digital Assets, Tokens, CBDCs, Metaverse, NFTs, FinTech and Alternative Finance, Fintech International, Fintech Services, Innovation and Resources No comments

Guest Post | Feb 27 2023

Image: Unsplash/Christopher Paul High

The operations of the transportation and logistics business are slowly improving thanks to blockchain technology. This technology is making businesses more profitable and efficient. The usage of blockchain is not limited to cryptocurrencies contrary to popular belief. This game-changing technology is having an influence on every industry, including the supply chain.

Blockchain creates a localized network that enables peers to transact and communicate without the need for centralized authority. This technology's decentralized nature provides several benefits. For example, it encourages transparency and increases security and stability.

The trucking and logistics businesses are one of the most significant benefactors of this new technology. In this blog, learn everything about blockchain and its function in the trucking industry.

What Is a Blockchain?

Blockchain technology is the foundation of digital currency. e.g. Bitcoin. The technology allows digital data to be disseminated but not duplicated. It means that each piece of data can only have one owner. While this is a groundbreaking technology, the principle is deceptively basic.

Blockchain can be considered an advanced online ledger system, a super-cool spreadsheet that secures, transparently, trustless, and publicly visible data on a ledger that allows owners to safely transfer ownership of units of value using public key encryption and proof of work or proof of stake procedures.

Problems Addressed by Blockchain

From dispute settlement to administrative efficiency and order monitoring, blockchain provides the solution to the trucking industry's long-standing difficulties. Here are some of these issues.

A high proportion of trucking businesses have six or fewer vehicles. As a result, the sector is having difficulty matching shippers (demand) with transporters (supply).
Every day, a large amount of billions is held up in payment disputes in the transportation business. A typical invoice requires a corporation to wait 42 days before getting paid. Several companies have millions of dollars in their bank accounts.
Temperature variations occur in 8.5% of sensitive medication shipments. As a result of exceeding permitted temperature ranges, several items never make it past customs.
Due to an overreliance on paper transactions, processing, and administrative expenses have climbed to as much as 20% of total transportation costs.

Why Is Blockchain Needed?

Why is blockchain needed? This is thanks to the transportation sector being inefficient. This is an industry riddled with uncertainty and "what if" possibilities. Manufacturers are having difficulty finding vehicles to carry their goods. This is not due to a lack of truckers interested in the profession. In actuality, truckers drive more than 29 billion miles with partially or empty truckloads.

The American Trucking Association estimates that over 1.5 million trucking businesses are employing approximately 3.5 million truck drivers. Yet, a significant percentage of these businesses have less than ten vehicles. This highly fragmented industry is striving to connect shippers (demand) and carriers (supply).

Simply said, the lack of a single database source is to blame for the transportation process's slowness. This industry requires a decentralized organization capable of handling all proceedings while also serving as a center for process verification and development.

Blockchain integration might assist to overcome various logistical bottlenecks, resulting in a 15% boost in income. By automating the whole selling process, blockchain allows businesses to save money and time. Smart contracts, for example, aid in the elimination of inaccuracy and the reduction of fraud.

How Blockchain Enables More Efficient and Cost-Effective Business Operations

Modern blockchain-enabled technology will render traditional paperwork redundant by making it simple to organize papers on a centralized digital ledger. Smart contracts will make approvals and customs clearance faster and more efficient, cutting processing delays for products at checkpoints. Businesses require up-to-date, safe, and authentic data to make decisions.

Since the whole network contributes to data validation, digital ledger technology assures trustworthy data across the transportation and logistics industry. For order tracking and authentication, blockchain provides a scalable, rapid solution.

Use of Blockchain in the Trucking Industry

Blockchain technology is driving advancements in the trucking industry. It can increase supply chain transparency, decrease risk, promote productivity, and improve overall management.

Let’s look at some of the applications of blockchain in the trucking industry:

Significantly increases the efficiency

Simply said, blockchain is assisting this business in addressing its shortcomings. Moreover, the lack of a single data source delays and complicates the process. This sector requires a decentralized organization, such as blockchain, to manage all transactions while also serving as a hub for verifying and improving the entire process.

It can handle every part of logistics administration, including transaction recording, the development of a very transparent system, and asset tracking with all necessary documents. Furthermore, it gives every stakeholder fast access to any data or papers they want.

Financial security is enhanced significantly

Shipping businesses may utilize the blockchain to get various IoT sensor data from carriers. This information might include the vessel's condition, route, and position, among other things, allowing rapid submission of paperwork, custom duties, audits, payments, and other uses.

Most significantly, this technology has the potential to make international B2B payments more convenient and safe. Blockchain, by boosting transaction visibility, also helps to reduce lead time and make the process completely frictionless and error-free.

Enhanced visibility and paperwork elimination

Several of the world's largest shipping businesses are investing in blockchain commercialization to accomplish paperless transactions, increase collaboration, and minimize friction among rivals. It is beneficial to collaborate with several players in this market, including shipment owners, inland and sea carriers, logistics service providers, port and terminal authorities, customs officials, freight forwarders, and others.

Furthermore, it is continually developing services and apps that may be combined with the platform. Container shipping sector heavyweights have already connected with these platforms.

Conclusion

Blockchain is still in its infancy, but it has a lot of potential. Nevertheless, for blockchain to take off, transportation must overcome three problems. It will take time and effort to convince one of the country's most fragmented and traditional businesses to accept a new internet network and adopt data standards.

FAQs

What are the benefits of using blockchain in the trucking industry?

Blockchain is a perfect solution for the trucking industry with numerous inlaid processes. It has various benefits that include:

Increase in security
Better traceability
Easier execution process
Reduction in time
Transparency

See: Blockchain-Enabled Fintech Solutions and Applications: What you need to know

What are the problems solved with blockchain?

Listed below are some of the problems solved by blockchain:

Bringing financial inclusion to the unbanked
Resolving KYC issues
Money remittances and cross-border payments

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