Blockchain in transportation

Blockchain technology has come a long way since the early days of Bitcoin. With more people getting involved in blockchain development in recent years, the technology’s potential has been growing at a steady pace. On these pages, we’ve examined in detail how blockchain is already impacting a number of industries like healthcare and pharma, financial services and real estate. We’ve also looked at how blockchain and DLT can help supply chain management.

In our latest piece, we are focusing on an area that is closely related to SCM - transportation. Indeed, transportation and logistics are important parts of any supply chain. Having examined the broader topic, we feel that it’s a good idea to laser in and explore how blockchain could impact those specific areas. So let's take a look at how we can use blockchain in transportation and logistics.

Problems in transportation today

To be able to identify the challenges the transportation sector faces today, it is important to first understand just how much of an impact the industry has on everyday life. We need to realize that directly or indirectly, every aspect of our lives is affected by our ability to transport goods, services and passengers safely and efficiently. Global trade, for example, requires reliable ways to transport goods across borders. The tourism industry would be severely hurt if people suddenly stopped traveling. We had a taste of that this year, with the COVID-19 pandemic dealing a heavy blow to the cruise industry.

Given the industry’s important role in facilitating everyday life, ensuring frictionless and efficient movement of goods , services and people, especially across borders is paramount. This necessitates the development of robust tools and systems to help improve cross-border management, increase trust across supply chains, bolster product traceability, eliminate inefficiencies and more. Fortunately, the strengths of blockchain technology can be utilized to address those challenges.

How blockchain can help?

While blockchain is a complex technology that is still growing and evolving, it is remarkable how much of its utility stems from the core tenets of its design: decentralization, immutability, trustlesness. Blockchain’s considerable versatility reflects the various ways in which the technology’s core properties can be utilized across a number of industries. When it comes to using blockchain in transportation, things are no different. Here is how blockchain’s characteristic traits can be used in this field.

Decentralization

When looking at what blockchain has to offer, decentralization is one of the main things that make the technology valuable. Decentralization allows for greater transparency and eliminates the need for a central authority to guarantee trust in a system with multiple counterparties.

Immutability

The way blockchain protocols are designed allows them to leverage cryptography to achieve true immutability. Consensus algorithms such as proof of work ensure that records stored on a blockchain network cannot be altered or otherwise manipulated. This creates a single source of truth, which can be invaluable for an industry like transportation. Blockchain’s immutable nature can be beneficial for verifying provenance, tracking movement of goods, combating counterfeiting, theft and other fraudulent activities. It can also improve accountability and regulatory compliance. All this will bring direct and indirect benefits to areas such as cross-border management, which can be sources of inefficiencies for the transportation industry.

Trustlesness

The fact that blockchain protocols are decentralized by design reduces the level of trust that is required for counterparties to work with one another. The level of trustlesness can be boosted further by utilizing tools such as smart contracts. Greater trustlesness means less reliance on intermediaries and smoother cooperation between counterparties, which translates to more cost-cutting opportunities.

How can blockchain be implemented in transportation?

As researchers and businesses continue to explore the potential and limitations of blockchain, they keep finding new ways to utilize the technology’s core features. When it comes to using blockchain in transportation and logistics, ongoing research points to a number of promising applications. Listed below are what we believe to be some of the most exciting use cases for blockchain in this area.

Improving cross-border cargo and passenger flow management

As mentioned above, multiple industries rely on our ability to transport goods and passengers across borders. This involves complex processes, including security checks, goods validation, transactions related to tariffs and tax and so on. Various emerging technologies such as face recognition, artificial intelligence and biometrics are used to improve efficiency in performing these processes.

Blockchain could be the connective tissue that allows for all these advanced technologies to work in concert with one another. It can provide powerful tools for storing, managing and accessing data collected with more traditional means. It can provide an immutable source of truth supporting authentication, traceability and regulatory compliance. It can also provide a way to automate transactions through smart contracts.

Improving efficiency in managing documentation

The transportation of people and especially goods generates a lot of documentation. Bills of lading, freight bills and consignment notes are just some of the transport documents that are used in the industry on a daily basis. Many of these documents are issued and then stored in paper form, which is not only an inefficient and costly way of processing documentation, but also an insufficiently secure one. Paper documents can be damaged, misplaced, stolen, counterfeited. However, documents stored in digital form on a blockchain should not share these vulnerabilities. Blockchain’s immutable nature can shield transport documentation from both negligence and malicious intent.

Building trust

We already said that one of the core advantages of blockchain technology is that it reduces the required trust between counterparties. However, the transparency that the technology enables can also strengthen trust among partners, as well as between businesses and the regulator.

A transport company could use blockchain technology to prove, for example, that the products it moves are ethically sourced. And with the help of instruments such as zero knowledge proofs, organizations are now able to share relevant data with their partners or the regulator, without revealing sensitive information

Improving automotive supply chains

We’re only mentioning this briefly, as we examined this specific use case in detail in our piece on blockchain in the automotive industry. Still, it should be noted that by streamlining automotive supply chain management processes blockchain can contribute significantly to achieving more efficient manufacturing of vehicles, ships and aircraft, which, in turn, will benefit the transportation industry.

Conclusion

As we near the end of our examination of the potential uses of blockchain in transportation, it becomes abundantly clear that the technology’s potential is just starting to be recognized across the sector. The strengths of blockchain technology are evident and they point to clever solutions to some of the most pressing issues the transportation industry faces today.

At LimeChain, we love to support people with big ideas daring to challenge the status quo. We believe that the biggest innovations happen at the intersection of bold vision and unmatched technical expertise. So if you have a vision of how blockchain could change transportation, tell us about it at [email protected]. We’ll provide the rest!.

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