Since blockchain was first recognized as the technology behind Bitcoin, it has expanded its role in increasing transparency and efficiencies across a wide range of industries.

Blockchain, a kind of distributed ledger technology, is able to improve supply chains by automating commercial processes and employing ‘smart contracts’ to expedite payments and limit invoice errors.

Because of its potential, the technology has attracted business interest and investment. In 2018, an estimated US$2.1 billion was estimated to be spent on blockchain solutions. According to global market intelligence firm IDC, the figure is projected to increase on a compound annual basis by 81.2 percent to US$9.7 billion in 2021. The logistics industry has a lot to gain from blockchain due to the need for trust.

The need for trust, transparency, and efficiencies

For decades, business transactions have relied on the principle of mutual trust between the parties involved in the supply chain or ecosystem. However, as the supply chain expands, more stakeholders and other processes come into play, and business agreements have become difficult to control.

Blockchain is a distributed ledger infrastructure that records transactions between parties in a way that eliminates the need for intermediaries to verify and coordinate transactions. Sensitive data can be transferred securely, leading to transparency. This allows customers to make more choices about the goods they buy.

Blockchain in action

Pacific International Lines, IBM and PSA International have collaborated to jointly develop blockchain-based products and services.  This is to enable faster approvals, while improving efficiencies, transparency and security within the region’s supply chain.

The partnership resulted in the successful pilot of an application designed on the IBM blockchain platform. The app was designed to track cargo movements between China’s Chongqing and Singapore through the Southern Transport Corridor. It allowed for the transparent completion of multi-modal logistics capacity booking.

Bonn, Germany-headquartered DHL has also been exploring blockchain technology. The logistics firm partnered with Accenture to build a prototype that tracks pharmaceuticals. They hope to use blockchain to save lives by reducing the risk of counterfeit.