What the heck is blockchain, anyhow?
You've heard the term. You may have a passing understanding of what it is, and you have probably skimmed articles declaring that it is going to completely change the face of transportation forever. But… what is blockchain?
In 1991, Stuart Haber and W. Scott Stornetta developed the first encrypted blockchain system. Their goal was to create a secure system allowing collaborative storage and access to documents that would make it impossible for users to tamper with timestamps. They further refined their design in 1992 by adding Merkle trees, which allowed the storage of more document certificates to be stored in one block.
These designs were originally intended to be used for cryptocurrencies, and serve as a public digital ledger that allows all participants to independently verify and audit all transactions at any time.
So, what does it have to do with freight?
Think of all the paperwork that needs to change hands in daily interactions with shippers, brokers, carriers, drivers, and dock workers. Now think of the paper trail within each organization that interacts with a specific shipment. How often have you had a load held up while waiting for the right piece of paperwork to make its way to the relevant parties? Have you ever found yourself questioning if a piece of documentation was doctored or conveniently disappeared, making a claim impossible? Wouldn't it be great if everyone had access to the same paperwork at the same time in a secure environment?
This is where blockchain would have a significant impact on our industry.
Not all rosy, unfortunately.
There are, of course, challenges in adopting this game-changing technology, the largest of which is the fragmentation of the industry. With over 1.5 million trucking companies, over 3.5 million drivers, and countless shippers, rolling out "one standard to rule them all" would be a daunting task. A new blockchain-based paperwork management system would not be free of cost, which means that not all parties would be willing to implement it, preferring to stick to their standard practices of phone calls, fax, and email to get the job done. That would create workflow segmentation, which can be a deal-breaker for high-volume shippers.
What does all this mean?
Blockchain is a useful technology, and when implemented well is a paradigm shift. If we all woke up tomorrow and all logistics and transportation paperwork were run through a blockchain system, we would all rest easier at night and would have a much easier job moving freight. Unfortunately, there are a few critical steps needed to get us from here to there, and they will be challenging. I am excited to see the impact that the tech will have on the transportation and logistics industry, but recognize that the transition will be a slow (and possibly expensive) one.