Logistics + blockchain: improving ecosystems and giving new opportunities to the transportation industry

Author: Zou Xiaohu

Source: China Water Transport Network

Editor's Note: The original title is "The blockchain accelerates the transportation industry–China Water Transport News Digital News·China Water Transport Network"

Recently, China Logistics and Purchasing Federation, Logistics + Blockchain Technology Application Alliance and Jingdong Logistics released the "Blue Book of China Logistics and Blockchain Integration Innovation Application". The Blue Book pointed out that China's blockchain technology is currently focusing on four major application directions in the logistics industry: process optimization, logistics tracking, logistics credit and logistics finance. Through the innovative combination of blockchain and supply chain, it is helping the logistics industry to move toward more Efficient, collaborative, and intelligent development. In addition, the blockchain is deeply integrated with technologies such as the Internet of Things, big data, and artificial intelligence to promote the establishment of an intelligent logistics ecosystem with multi-party trust and promote the transformation and upgrading of the entire logistics industry.

Few industries can outperform the transportation industry from the benefits gained from the blockchain. The speciality and complexity of the logistics and transportation industry, the existence of a wide range of employees, complex structure, subcontracting of business layers, difficulty in obtaining transportation capacity, and the existence of practical problems in the logistics and transportation industry, etc., require blockchain. Technology to solve!

Blockchain improves transportation ecosystem

The transportation industry has high expectations for the blockchain. For the transportation industry with massive traffic status data, the blockchain is tantamount to changing the rules of the game.

In essence, the blockchain is naturally suitable for industries that are internally dispersed and isolated. It is indispensable for the logistics industry to work closely with many parties. Blockchain is a distributed ledger technology that provides a more transparent and secure way of doing business, resulting in non-tamperable transaction records, and ultimately tracking the ownership and payment of goods, thereby greatly increasing the level of synergy. And work efficiency.

The blockchain has enormous potential to help the transportation industry cope with some long-standing challenges and get the following help:

Increase security. Support access to critical transaction information through private, secure, and transparent shared ledgers, giving transportation companies a deeper understanding of the high-profile segments of fraud and tampering in business operations, such as service contracts for the container industry. The blockchain can also form non-tamperable records for agreed terms and conditions, helping to reduce contractual terms fraud and manipulation.

Provide digital data trust. By digitizing important data and publishing it on the blockchain, logistics companies can reduce or even eliminate unnecessary paperwork. Streamlined digital processes provide secure, reliable access to information, fraud prevention, and trust. The important point here is that the blockchain is not intended to replace the existing enterprise system. It can allow the enterprise to still work in the existing system, and the chain enterprise can synergize the chain enterprises to improve the synergy efficiency.

Improve logistics management across the ecosystem. Blockchain technology is used to increase the visibility and transparency of all stakeholders across the supply chain, giving companies insight into the chain of custody, payment information, and the location of goods that are initially received and delivered. Enhanced tracking capabilities enable companies to more accurately assess and respond to unexpected situations that may affect the supply chain. Here, you can fully consider the combination of IoT technology, further enhance the visualization of the physical world, and reduce human operations through machines and sensors.

Improve the efficiency of industry interaction. Blockchain facilitates smoother, more efficient interactions between suppliers, freight forwarders, consumers and other stakeholders. In a complex business network, blockchain can solve commercial trade transactions under weak trust relationships, such as providing the same source of facts for all counterparties, improving dispute resolution efficiency and enhancing trust and cooperation among industry participants. awareness.

New signs of industry development and challenges

The development of the logistics industry is showing the following development signs in three different dimensions: buyer influence, business impact and market impact:

Consumer groups have increased dramatically. The consumer community is still in a period of rapid growth;

New lifestyle. The mobile Internet will continue to transform everyone's food, clothing and housing, and will continue to change the way each company conducts its business;

Quality of service requirements. The buyer's (can be a consumer, or every buyer on the supply chain) requirements for experience and equity will drive industry service standards and service quality improvements;

Stabilize the economic environment. The global economy and the macro-environment of the Chinese economy are stable, and closer industrial industry collaboration and cross-regional trade will ensure the continued rapid development of the logistics industry;

Innovative technology support. Innovative technical means give the logistics industry more change and vitality, and promote the overall industry to reduce costs and increase efficiency;

New competitors. Start-ups born in the digital age continue to gain traction in the market. At present, the global logistics market is 15 trillion US dollars, and the increase in productivity can bring billions of dollars in benefits to this market;

Digital operation. The digitally driven open business environment not only supports new operational and organizational environments, but also supports completely different business models.

Current logistics faces three major business challenges:

The traditional strategy conflicts with the new model of the logistics service market. Consolidation and mergers and acquisitions in the logistics industry have occurred, which has led many transportation providers, especially those who have recently merged with their former competitors, to ignore the changes in the industry and instead use the advantages of economies of scale to avoid change. At the other end of the innovation arena, many companies will adopt innovative technologies such as blockchain, cloud computing and artificial intelligence to change the way they interact with customers and provide new business models that will change the industry to a large extent.

Despite the increasingly complex operational constraints, logistics transportation rates have declined. Many logistics companies have achieved relatively stable development. Many years of operation can have a relatively stable market, visibility and moderate profitability. Therefore, we have seen many traditional enterprises invest in new areas and new production capacity, and expect to bring more profit. . However, even if a large part of the cost has been passed on to the logistics industry buyers, the uncertainty of cross-border supervision and international trade will continue to push up the global transportation cost. The change in the available capacity of the industry will exceed the speed increase, resulting in supply and demand. The second imbalance. Most of the participants in the transportation ecosystem face the dilemma of falling profits due to overcapacity, reduced freight rates and rising costs.

The digital giant with strong financial resources has entered the logistics service market. When the remaining assets are flooding the market filled with dissatisfied buyers, Internet companies and digital giants will realize that there are market opportunities at this time, and it is possible to enter the logistics service market. Internet giants can take advantage of important data to improve interactions between front-end transaction processes (freight estimates, shipping bookings, cargo acceptance, etc.) and back-end transaction processes (billing, payments, etc.) and customers. In addition, they can apply proven artificial intelligence capabilities to their partners' existing business systems or new internal operations platforms to improve operational performance.

Eliminating the four major frictions

In the initial blockchain survey, three areas of friction that the blockchain can help overcome were identified: information, interaction, and innovation. In these three areas, the forerunners of the transportation industry hope to use the blockchain to reduce four specific frictions that affect regulatory restrictions and promote supply chain fluency: restrictive regulations, imperfect information, excessive intermediaries, and new entrants The industry brings risks.

The three main ways in which blockchains work in these areas are to increase efficiency in payment processing, partner data sharing, transportation status, and tracking.

Reducing trade barriers and increasing efficiency in the supply chain can increase global gross domestic product (GDP) by nearly 5% and global trade by 15%. For example, since 1998, 20% of all containers handled at ports have been empty containers. The cost of relocating these empty containers on a global scale is estimated at more than $15 billion, and inefficiencies abound. IBM's benchmark data shows that about 80% of transportation executives say it takes an average of 28 days or more to receive payments after the goods or services are sold. The executives also said they would pay 45 days or more for their own invoices.

A number of transportation industry executives said that there are still a number of blockchain subversive opportunities. Blockchain not only means having data, it also means having trustworthy data, which is what the transportation industry needs.